SINGAPORE: The recent revelation that Malaysia is hoping to use palm oil as part payment for its future arms acquisitions is not surprising, although it is unlikely that Western manufacturers will be amenable to such an arrangement.
In mid-April, Malaysian Defence Minister Mohamad Sabu had confirmed that the country was negotiating with several countries to acquire military weaponry through barter trade, with China, Pakistan and Russia said to be open to such an arrangement.
He added that this would be a way to relieve the financial burden on Malaysia’s finances, which have been under strain in the past few years. This has led to curbs on government spending, and has seen Malaysia’s efforts to modernise its military hit hard due to budget constraints.
The proposed payment structure would likely have an effect on its future procurement programmes such as the upcoming Light Combat Aircraft (LCA) requirement for the Royal Malaysian Air Force (RMAF).
Malaysia has issued a Request for Information (RFI) from various aircraft manufacturers for 12 to 18 aircraft, which will form the basis for an eventual three squadrons of such aircraft by 2055 under its Capability 55 plan.
HOW REALISTIC IS PALM OIL FOR DEFENCE PROCUREMENTS?
Several aircraft manufacturers have confirmed they have responded to the RFI, including Russia with its Yak-130, Pakistan with the PAC JF-17 Thunder that it has co-developed with China, Italy’s Leonardo with the M-346 Master, Sweden’s Saab with the JAS-39 Gripen and South Korea’s KAI FA-50 Golden Eagle.
The European and South Korean companies have not commented on whether they would be willing to accept part-payment in palm oil, but given that they have traditionally insisted on cash payments, it could be a challenge getting them to do so.
READ: Almost a year since Pakatan Harapan swept into government, has Malaysia lost its mojo for reform? A commentary
Malaysia’s Prime Minister Dr Mahathir Mohamad had also publicly castigated the European Union for its plan to reduce and eventually phase out the use of palm oil in biofuels, which adds yet another layer to the story.
The willingness of China, Pakistan and Russia to accept palm oil as payment would appear to put these countries and their offerings in the driving seat, possibly complicating things for the RMAF as it is understood that the service has a preference for a Western type to be its future LCA.
This is understandable as the RMAF is still primarily organised and trained along western lines, and even its Russian-built Sukhoi Su-30MKM Flanker fighters are fitted with some western avionics and carry French targeting pods.
A possible solution to this potential payment impasse can be found in neighbouring Indonesia.
Jakarta had ordered six diesel-electric submarines from South Korea in two tranches, with the second contract for three boats recently signed in April structured in such a way that will see the Export-Import Bank of South Korea finance the deal by providing a loan that will cover 85 per cent of the costs.
A similar agreement could well be an option if palm oil part-payment is not an option, although it remains to be seen how the potential for taking on more debt is seen politically, even though such a loan is likely to be on generous terms.
These loans are part of a South Korean strategy to promote and develop its own arms industry and their export potential, by offering cash-strapped developing countries soft loans to pay for South Korean-made arms.
These allow the South Korean defence industry to stay in business without having to rely on just the South Korean military as a customer, and also help in marketing as the manufacturers can claim export successes.
BIGGER OPERATIONAL CHALLENGES
An additional factor to consider is the potential challenge when it comes to integrating the Russian or Chinese-Pakistani jets into the RMAF’s inventory and force structure.
Having systems and platforms from a variety of different sources and using different systems makes it difficult to get these systems and platforms to “talk” to one another and work seamlessly together, a crucial element in having an integrated air defence system that improves the ability of air forces to defend its airspace.
An increasingly important aspect of this integration is via modern datalinks such as the American encrypted, jam-resistant military data Link 16 that enable all linked elements to share information securely, improving each other’s situational awareness of the “big picture” in the air.
This tactical data link system is used by most air forces friendly with the US.
The RMAF’s eight Boeing F/A-18D Hornet fighter jets are equipped with these following a recent upgrade, but it would be well-nigh impossible that the US would agree to having these fitted to the Chinese JF-17 or Russian Yak-130s should Malaysia go with these for the LCA.
There are also logistics and sustainment issues to consider, particularly for the JF-17. The type, which is also operated by Myanmar and Nigeria together with Pakistan, is fitted primarily with Western avionics and compatible only with a number of the Western short-ranged air-to-air missiles and laser-guided bombs used by Malaysia.
It is powered by an engine that is a derivative of the Russian ones used on the RMAF’s mothballed MiG-29 fighter aircraft operated by Malaysia, meaning the RMAF will find some this these systems familiar or at least, already have an existing relationship with the OEMs (original equipment manufacturers) for future sustainment.
However, the JF-17 currently comes with a radar or Chinese origin. This means that its long range air-to-air and air-to-ground missiles which require radar guidance need to be of Chinese manufacture.
Malaysia already possesses such missiles of both American and Russian origin for its Hornet and Su-30 fleets, and adding a third country’s missiles into the RMAF’s arsenal will definitely add to the logistical burden and personnel training requirements for the service.
Manufacturer PAC is keen to integrate Western radars on the JF-17, however these have so far gone nowhere due to various security and commercial reasons, and Malaysia may baulk at the cost of engineering work to integrate these systems if it mandates a Western radar for a potential JF-17 buy.
THE FUTURE OF WARFARE IS ABOUT HAVING EFFECTIVE SYSTEMS
It must be remembered that the battlefield of the future (indeed, the present to some extent) will be dominated by information along with the ability to share and act upon it in timely manner.
Capabilities will be less about platforms but more about systems and the ability of the said platform to work effectively within a system.
This means that buying platforms that act as standalone components without thinking about how they will work together as an integrated force will almost certainly lead to a capability that is less than the sum of its parts, rendering your existing equipment and your military as a whole less effective than they could be.
Put it another way, one can say Fighter A costs only a fraction of the cost of Fighter B, and the cost is further offset by the vendor being willing to accept payment in commodities in lieu of cold hard cash.
But what is the true cost of Fighter A in monetary and capability terms if one ends up spending more to set up and maintain a separate logistics tail on a platform that does not work well with the other equipment in your air force compared to something that is more expensive upfront but takes less effort to integrate with your existing equipment?
In short, it is not solely about the quality or the quantity of the soldiers, jets, tanks or ships.
While these factors remain important in combat alongside tactics and logistics, a military that can fight in an integrated fashion will stand a better chance of prevailing against an opponent that cannot do likewise, all else being equal.
It’s worth Malaysia rethinking its strategy to procure advanced military weaponry using palm oil if this payment method narrows its options and ends up denting the effectiveness of its defence force.
Mike Yeo is the Asia reporter for US-based defence publication Defense News.