Military superpowers show ?

IT might be big business in the developed and industrialised countries but the defence industry is flexing its muscle with greater intent when it comes to displaying, developing and selling their wares to countries in Asia.

That was aptly displayed at the recent Defence Services Asia (DSA) expo, where 850 companies from 45 countries participated in the four-day event, showing the variety of arsenal from handguns to jetfighters.

The reason for such a display boils down to what drives the industry spending. And it's no surprise much of that is taking place in Asia.

Abdul Harith: If we can champion the local industry, local original equipment manufacturers would benefit from the spillover effects.>>

A report by IHS Jane's, a defence industry publication, has forecast China's military spending will outstrip the combined total of Nato's top eight members Britain, France, Germany, Italy, Turkey, Canada, Spain and Poland excluding the United States by 2015.

Furthermore, growth in spending is taking off not just in China but also in South-East Asia, which has spurred its spending.

A report by the Stockholm International Peace Research Institute shows that the region increased its defence spending by 13.5% last year, to US$24.5bil. The figure is estimated to skyrocket to US$40bil by 2016, with the report noting that Malaysia's defence spending has also risen.

As observers have noted, Asia will outspend Europe this year. The London-based International Institute for Strategic Studies (IISS) says in the think tank's “The Military Balance 2012” annual report that China's spending has fuelled other growing Asian states into pouring more funds into their military and defence.

According to the IISS, Asia, excluding Australia and New Zealand, spent US$262bil on defence in 2011 with China alone accounting for US$89bil compared with Nato's European members, which spent about US$270bil.

Five contracts and 15 memorandums of understanding worth a total of more than RM4bil were signed between the Defence Ministry and several local and foreign companies in conjunction with the DSA.
Five contracts worth RM357.2mil were inked between the ministry with four local companies and a Russian firm.

With military superpowers like the United States and Russia flexing their military might, smaller Scandinavian countries were seen displaying their sophisticated equipment and gadgetry at Asia's largest arms exhibition.

Life-size replicas of an AugustaWestland helicopter and a Eurofighter Typhoon attracted crowds in droves, along with military equipment and weaponry that were available for tryouts (sans the artillery).

The new behemoth in the sky, the Airbus Military A400M tactical airlifter, also made a stop at the Royal Malaysian Air Force (RMAF) Subang airbase in conjunction with the exhibition.

The exhibition has also set the stage for Malaysian companies to showcase their growing expertise within the sphere of the defence industry.

A full-sized replica of the Eurofighter Typhoon parked on the PWTC parking lot is one of the main attractions of the DSA 2012.

 

At the DSA, visitors were treated to demonstrations by commandos and static displays occupying a floor space of 40,000sq m.

Tucked in a corner of the show, British-based defence, aerospace and security company BAE Systems is slowly but definitely shifting its focus to the Asean region and the wider Asia-Paficic.

Vice-president for Malaysia and Indonesia Mark Burgess tells StarBizWeek that the company had recently shifted its entire operations from Singapore to Malaysia in a bid to establish its regional hub in Kuala Lumpur.

“We see far greater opportunity in the Malaysian market both in terms of sales and partnerships. For the last 20 years, Malaysia has been a far more successful market than Singapore. Strategically, coupled with a number of reasons, it makes much more sense to move our office here,” he says.

For the record, BAE Systems is vying to supply its combat aircraft, Eurofighter Typhoon, to the Government, which is currently considering to retire the ageing fleet of Russian made MIG-29N under the Multi Role Combat Aircraft (MRCA) programme.

It is looking to supply a fleet of 18 to 36 of fully-equipped Typhoons to the RMAF, of which it had submitted a formal proposal that comprise a 100-page list of technologies that the company was willing to transfer as well as names of local and overseas companies that were willing to participate in the process.

With the re-establishment of Malaysia-Britain bilateral relations in almost 20 years following a visit by British Prime Minister David Cameron, the Typhoon deal is seemingly a catalyst to strengthen critical trade relationship between both countries.

“We are not new to this market, as BAE Systems had helped with the start up of SME Aerospace Sdn Bhd by contracting it to manufacture Hawk aircraft pylons with the technical assistance of BAE Systems back in 1992,” Burgess says.

He says BAE Systems is also central to the creation of Composites Technology Research Malaysia Sdn Bhd, which benefited from the transfer of technology from BAE and has since transformed itself to a full-fledged composite component manufacturer for the aviation industry.

“BAE System and its consortium of manufacturers had bought about £800mil worth of goods and services from Malaysia. Based on current plans, another £1.5bil of expenditure is expected to be channelled into Malaysia over the next five years,” he says.

Burgess says BAE Systems and part of its consortium are already a very important trade and investment partners with Malaysia, and the MRCA programme will build the relationship further via offset policies that are imposed by the Ministry of Defence.

Offset agreements are often an integral part of international defence contracts, where a supplier often agrees to buy products from a local country in order to win the country as a customer, while in return reinvest the money into the country via the purchase of components, services and technology transfer.

Another party benefiting from technology transfers and joint ventures (JV) is DRB-Hicom Defence Technology Sdn Bhd (Deftech). It has a successful JV with several big names including Turkish firm FNSS, which manufactures several types of armoured personnel carriers (APC).

FNSS is a JV established by Nurol Holding of Turkey and 49% owned by BAE Systems Land & Armaments LP.

When met on the sidelines of DSA 2012, DRB-HICOM head for automotive and defence Abdul Harith Abdullah says the conglomerate is looking for more industrial collaborations and this is just only the beginning of a bigger picture to drive the nation's defence industry.

“The 8x8 wheeled APC is the starting point for us to make our presence felt in the international arena. The defence budget for Malaysia is not extremely big in any way and to survive in the industry, we could not limit ourselves to just land-based businesses,” he points out.

With the collaboration with FNSS, doors are opened to Deftech to acquire valuable technological know-how and intellectual property to enable it to design and manufacture APVs on their own in the future.

Deftech is also keen to stretch its wings to go into the aviation and naval industries. Last year, Deftech was awarded a RM7.55bil contract from the Government to supply 257 units of APCs in 12 variants.

The Malaysian army might require as many as 500 such vehicles to replace the soon-to-be obsolete Condor and Sibmas-type APCs that were in use since the early 1980s.

In 2002, Deftech collaborated with FNSS to supply 211 of ACV300 to the country.

“Our aim is to be at the forefront of the national defence industry and not just rely on trade. If we can champion the local industry, local original equipment manufacturers would benefit from the spillover effects, and we are hoping for a really big success to expand internationally,” he says.

At the DSA 2012, DefTech signed a cooperation agreement with India's Tata Motors to develop and promote Tata's high-mobility vehicles.

Last year, DRB-Hicom signed an industrial cooperation teaming agreement with Sweden's SAAB AB as part of a collaboration to supply airborne early-warning and control system to the RMAF.

Meanwhile, Destini Bhd is also vying for a piece of the pie in the defence industry, with an ultimate aim to grow its business outside Malaysia.

Destini, a maintenance, repair and overhaul service provider for safety survival and rescue equipments, is also involved in the trading of military supplies. It was awarded a RM7.9mil contract to supply the army with anti-tank 40mm rocket-propelled grenades.

Destini group managing director Datuk Rozabil Abdul Rahman says the defence industry is not an easy business to venture into.

“The spending in the local defence industry is shrinking, and that is the reason why we desire to expand overseas. For the other second liners, you should think big and expand and not just rely on local contracts,” he says.

By CHOONG EN HAN han@thestar.com.my

Evil in the name of God; Beware deadly con men!

In a country with several religions, there are many who claim to be holy. But how do we tell the saints and devils apart?

IT’S one of the most heinous crimes the country has seen in decades.

A heartless charlatan, claiming to be a holy man, gains the trust of a family and in the pretence of helping them settle a family feud, feeds them with poisoned milk which he claims has been blessed.

Then, as they fall unconscious, he steals their jewellery and tries to cover up his crime by setting their house on fire.

The nation should be in shock. The outrage should be palpable. The hunt for this murderer should be a priority.

The Mona Fandey case shocked the nation years ago. So did the case where three men beat a couple to death in a bizarre ritual to “heal” the latter.

But we seem to be slow on the uptake this time – probably distracted by the politics of the day. Or maybe we are inured by all the con men out there, most of whom claim to be doing God’s work.

And there are many such incidents in recent times.

There was a man who razed his house on the advice of a “holy man” and rebuilt it from scratch according to the latter’s specifications. It cost him a fortune but his luck did not change. Instead, his business went south.

The “geomancer”, when confronted, suggested further renovation.

And, the victim later died in an accident. The suffering the family went through is something I would not wish on anyone – except maybe the mass murderer of Kajang.

Another renovated his house because “some guy said so”. The living room became the bedroom and vice-versa.

His luck, too, did not change. But since he did no re-wiring works, he had to fumble in the dark after entering his house – or the bedroom - to get to the light switches. These are all at the other end.

Why do people even believe in these con men, you may ask?

Probably because there are some genuine ones who have been given the “gift” of being able to help others.

Which is what makes the killings in Kajang very outrageous. It hurts. It makes me seethe. It makes my blood boil.

You see, I was a medium once – the type who would go into a trance and sort things out for people.

The trance is an experience that’s difficult to describe. It could be like you are in deep sleep and when you wake up, there are no memories of what transpired at that time. Or, one might call it, a dream state. Or even an “out-of-body experience”, where you watch yourself do or say things but without control over your ac­­tions.

I did not like not being in control of myself. So, I sought another (more famous) medium to put a stop to it. He did some rituals and told me that I would never lose control again – not unless I or someone close to me was in danger – or if something important was happening.

Sounds like mumbo-jumbo, doesn’t it? Well, I never lost control since then - except once!

I was driving to Ampang one day and all my senses suddenly began to act up. So, I turned the car around and headed back home to Petaling Jaya. However, when I tried to open the door, I could not. The door was latched from the inside. And, there were noises coming from within.

I raced to the back lane and to the back door. It was ajar where some thieves had just fled. Coincidence? Was I being warned? I don’t know.

A happier example occurred to me later. A holy man, matted hair and all, came by asking for alms. I gave him about RM10. He thanked me and walked away. All of a sudden, he stopped and came back to me.

“Young man, do you dabble in numbers (the 4D kind, not numerology)?” he asked. And, I was young only by his standards. I nodded. “Add the number nine to your address and you will get lucky,” he said.

Three days later, I was richer by RM18,000. Coincidence? Random luck? Maybe. It’s something I’ll never know. I have never seen the man since, so I have not been able to thank him.

So, they are not all bad out there. There are some saints among the sinners.

But the guy responsible for the Kajang tragedy wrought evil in the name of God. He must face the full wrath of society.

Meanwhile, I am still grappling with trying to understand how anyone who calls himself a human being - much less a holy man - could plan to wipe out an entire family for a handful of jewellery.

It’s just so senseless.

 Why Not? By D. RAJ  Beware deadly con men  > There are things out there that defy explanation. One of them is: Why is it in our search for material wealth, we have lost our human values.

Beware deadly con men

PETALING JAYA: Before, there was only the risk of losing money or ending up with a broken heart to glib-tongued swindlers.

Now, Malaysians have to be on the lookout for deadly con men pretending to be mediums to gain the trust of unsuspecting victims before robbing and even killing them.

A recent triple murder in Taman Sri Ramal, Kajang, has highlighted the existence of such vile fraudsters.

A medium who claimed he could mend family disputes through a ritual, poisoned them with milk laced with weedkiller in the wee hours of April 1.

The deceased: (From left) Rajeswary, Manivaran and Sakunthala.

He fled the house after stealing their jewellery and valuables and setting a gas cylinder on fire in the kitchen.

K. Rajeswary, 28, died in hospital on April 4 while her brother Manivaran, 33, died four days later. Their mother M. Sakunthala, 63, died on Saturday.

Selangor police chief Deputy Comm Datuk Tun Hisan Tun Hamzah said although deaths were rare in cases involving con men, many other cases, however, go unreported.

“People should be wary and be extra cautious when seeking alternate solutions to problems, including family disputes and medical ailments,” he said.

He said in most cases, the public seek these people out of desperation.

As con men look for ways to manipulate strengths and weaknesses, they would first work on gaining trust.

“The eventual victims are easily duped because they are usually in a state of distress. The con men prey on their desperation to get what they want,” he said.

Devastated: M. Karuppanan, 65, and his eldest son Sargunan (left) at the Serdang Hospital mortuary.

 

Meanwhile, the Bukit Aman Commercial Crimes Investigations Department (CCID) director Comm Datuk Syed Ismail Syed Azizan said Malaysians have been swindled of more than RM32mil through scams between January and June last year.

Besides Internet fraud, the con tricks also include parcel scams (victims are told that he or she had received parcels with expensive gifts, jewellery or cash, but the packages are detained by Customs and payment is sought for the release), Macau scams (con men claiming to be police or bank officers duping the victim is being investigated and that he or she has to surrender money into an account to verify that it was not gained illegally).

“A total of 454 Macau scam cases were reported amounting to losses of over RM10.6mil while 472 parcel scam cases were also reported with losses of over RM10mil as well within the same period,” Comm Syed Ismail said.

 By AUSTIN CAMOENS and SHAUN HO austin@thestar.com.my

Unemployment Fuels Debt Crisis

Job-seekers wait outside a job center before opening in Madrid, Spain. Spain’s jobless rate has more than doubled since 2008 after the collapse of a real estate market that fueled a decade of economic growth. Photographer: Angel Navarrete/Bloomberg

Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region’s debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds. 

Joblessness is soaring as European nations reduce spending, igniting strikes and protests from Athens to Madrid. Unemployment in Spain surged to almost 24 percent, pushing the euro-region level to 10.8 percent in February, the highest in more than 14 years. Italy’s rate is at 9.3 percent, the most since 2001, hampering efforts to spur economic growth.

Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets. The yield premium investors demand to hold Spanish 10- year debt over German bunds reached a four-and-a-half-month high this week.

“The higher the jobless rate, the more that has to be spent on benefits, creating the potential for a negative spiral,” said Christian Schulz, an economist at Berenberg Bankin London and a former ECB official.

Berenberg Bank predicts euro-region unemployment will peak at 11.5 percent in September, he said.

The extra yield investors demand to hold Spanish 10-year bonds rather than similar-maturity German securities was 411 basis points yesterday, compared with an average 130 during the past five years. The rate has risen more than 80 basis points this year. The spread was 376 basis points for Italy and 1,072 basis points for Portugal.

Youth Joblessness

Spain’s jobless rate has more than doubled since 2008 after the collapse of a real estate market that fueled a decade of economic growth. The country is now home to more than one third of the euro-region’s jobless and more than half of young people are out of work.

Hundreds of thousands of Spaniards protested on March 29 in a general strike against Prime Minister Mariano Rajoy’s overhaul of labor market rules and the deepest budget cuts in at least three decades that are pushing the economy deeper into its second recession since 2009.

“Spain faces formidable challenges, especially concerning youth unemployment,” European Union Economic and Monetary Affairs Commissioner Olli Rehn told lawmakers at the European Parliament in Strasbourg Wednesday.

Italy’s jobless rate rose to the highest in more than a decade in February and the International Monetary Fund forecast on April 17 that unemployment will reach 9.9 percent this year. Italian bonds reversed morning gains yesterday after the government cut its growth forecasts and abandoned a goal to balance the budget next year.

Estimate Revisions

Italy’s gross domestic product will contract 1.2 percent this year, more than twice the previous forecast, and the deficit will end next year at 0.5 percent, more than the 0.1 percent previously forecast. The Italian announcement came six weeks after Rajoy abandoned Spain’s deficit goal for next year.

Joblessness in both countries may worsen as the recession deepens and rigid labor market laws are overhauled. Rajoy passed in February a plan to make it cheaper for employers to let workers go, while Italy gave companies more leeway to fire workers without fear of court-ordered reinstatements.

“High unemployment means a very dissatisfied electorate and makes it difficult to get stuff done,” said Padhraic Garvey, head of developed market debt at ING Groep NV in Amsterdam. “It makes it significantly more difficult to pass austerity measures and exacerbates a difficult situation.”

Rajoy’s Challenges

Rajoy probably will face further unrest if he’s forced to implement more budget cuts to meet ambitious deficit goals. His government has now pledged to reduce the shortfall to 5.3 percent of GDP in 2012 from 8.5 percent in 2011 and by more than 2 percentage points next year to get within the EU’s 3 percent limit. Despite a raft of austerity last year, the country achieved a deficit reduction of less than 1 percentage point.

Falling joblessness in Germany underscores the widening gap between the resilience of the euro-region’s largest economy and the so-called periphery. The nation’s adjusted jobless rate slipped in March to a two-decade low of 6.7 percent, according to the statistics office. While the 17-member euro-region economy will shrink 0.4 percent in 2012, Germany’s economy probably will grow 0.7 percent, according to economists’ forecasts compiled by Bloomberg.

“The divergence between Germany and the other economies is here to stay,” said Christoph Rieger, head of interest-rate strategy at Commerzbank AG in Frankfurt. “It provides a structural reason for spreads to stay wider, regardless of what other progress is made on containing the crisis.”

Greek Elections

In Greece, where official data showed unemployment climbed to 21 percent in January, elections scheduled for May 6 may produce a hung parliament, raising questions about the nation’s ability to implement its austerity measures. The nation’s 2 percent bond due in February 2023 trades at about 25 cents on the euro.

In Portugal, where the government forecasts the unemployment rate will average 13.4 percent this year, up from 12.7 percent in 2011, Soares da Costa SGPS SA, Portugal’s third- biggest publicly traded construction company, said it’s expanding abroad and eliminating jobs at home, where it faces a slump in government infrastructure spending. 

“High and rising unemployment is likely to impact at a political level and may make the reforms more difficult to undertake,” said Eric Wand, a fixed-income strategist at Lloyds Banking Group Plc in London. “If the political desire to reform comes in to doubt, then the market wouldn’t like that. There’s good scope for the crisis to get worse in the near term, the economies are still on pretty shaky ground and there’s a lot of political risk.”

By Daniel Tilles at dtilles@bloomberg.net.