Malaysia ditches Eurocopters on gloomy economic outlook

KUALA LUMPUR, Oct 26 - Malaysia will ditch the RM2.3 billion Eurocopter defence deal as it battens down to face the global economic storm, sources said today.

Prime Minister and Defence Minister Datuk Seri Abdullah Ahmad Badawi decided to cut out the EC725 military helicopter contract over the weekend when the government reviewed its expenses in light of falling revenues from crude oil and palm oil and slowing economic growth for the next few years.

"The Eurocopter deal is off due to the bleak economic times ahead," a source told The Malaysian Insider.

Opposition leaders and critics had savaged the purchase of the dozen EC725 helicopters, saying its RM193 million price tag per aircraft was more than double of Brazil's contract for 50 EC725 helicopters, which came tom RM84 million per aircraft. The Public Accounts Committee (PAC) said it will investigate the deal.

Abdullah had earlier said he will investigates claims of irregularities over the purchase of military helicopters after company representing a rival military chopper, the Kazan MI-172, said it offered to sell a dozen helicopters at RM898 million, RM1.5 billion less than the Eurocopter deal.

But the Kazan MI-172 is expected to be phased out of production soon although it shares similarities with the current Nuri helicopter fleet, particularly its rear ramp door that is used for troop and materiel transport.

Opposition parties had also lodged reports with the Anti-Corruption Agency (ACA) asking for investigations as the tender was allegedly awarded before evaluations were completed and two days before Deputy Prime Minister Datuk Seri Najib Abdul Razak swapped the defence portfolio with Abdullah.

The government earlier through a Cabinet meeting on July 18, 2007 had made the decision to acquire new helicopters to replace the Nuri aircraft following a series of crashes for the ageing transport helicopters in the Royal Malaysian Air Force (RMAF).

The Nuri or Sikorsky S-61A-4 came into Malaysian service in 1968. The medium transport aircraft has suffered 18 crashes and killed 95 servicemen and is due to be phased out in 2012. There reportedly only 31 left in RMAF service

However, sources said the Nuris would have been pressed into service with the Army Air Wing if the EC725s arrived on time. The Eurocopter EC725 or Cougar is a medium lift helicopter that is used for combat search and rescue missions.

The Cougar, which can carry up to 29 soldiers, beat out the Sikorsky H-92, the AgustaWestland EH-101 Merlin, the Boeing CH-47F and the Russian MI-172 in an open international tender issued at the Langkawi International Maritime and Air Show in December 2007.

Sources said Eurocopter won the deal as it also proposed to invest RM250 million to upgrade Malaysia's maintenance, repair and overhaul (MRO) capacity in its Subang facility as part of its tender.

It has already invested about RM45 million in Malaysia and had plans to spend another RM20 million this year to expand its Subang facility as well as MRO facilities in Kuching and Kota Kinabalu.

Apart from the Nuris, the RMAF operates the A109 light utility helicopters and Super Pumas for VIP service.

-TMI