ASK YOURSELF IS TONY PUA PROVIDING PRECIOUS INFORMATION OR VICIOUS MANIPULATION?

I have learned that some misconceptions exist about Tony Pua’s views on Littoral Combat Ships (LCS), which I will attempt to correct here. Relying on a half of dozen research and development reports into Naval shipbuilding projects and other evidence from variety of defence scholars and industry expert sources, I adopt a prosecutorial stance to put Tony Pua on trial. ASK YOURSELF IS TONY PUA PROVIDING PRECIOUS INFORMATION OR VISCIOUS MANIPULATION? Using Economics of Complex Weapon Procurements and evidences provided by experts in the field, I bring charges against Tony Pua and let the reader, as juror; decide if the evidence supports the finding of guilty as charged for the accused of the latter.

It is undeniable that the Malaysian Navy is acquiring Gowind which is a TYPE of monohull corvette develop since 2006 by DCNS. It is specifically designed to operate in littoral zone with capability for emerging missions such as anti-piracy, sea control and denial, combat, counter-terrorism, drug interdiction and anti-smuggling operations, oil and gas platform protection, search and rescue, fisheries protection, environmental protection and humanitarian support. The Gowind is designed for simplicity and for easy customizing to the client navy's requirements including local in-country shipbuilding under technology transfer agreements. The Malaysian Navy will equip the Gowind with improved command and control systems, advanced electronic warfare capabilities, three-dimensional radar, surface and air warfare missiles, and a torpedo defense system. AS A RESULT OF THIS ADDED CAPABILITY, THE SHIPS WILL BE CLASSED AS LITTORAL COMBAT SHIPS RATHER THAN OFFSHORE PATROL VESSELS (OPV). Even the leading defence intelligence magazine FORECAST INTERNATIONAL had classed the new Malaysian ships as Littoral Combat Ships when it ran an article entitled “Increased Capability For New Malaysian Frigates” which was published in February 2011. What is Tony Pua trying to proof when he said “We would now like to call upon MINDEF to ‘call a spade a spade’ and stop the attempt to disguise our acquisition with fancy names to justify their substantial cost.” There are much type of playing cards and just as many spades. The German uses blade, the Italian uses sword and the French uses the standard symbol to resemble a spade. Which one are you referring to Tony? Obviously MINDEF isn’t playing from the same deck of cards as yours.

The decision to split the cost of the ships between two Malaysia Plans (RMK) was announced by the government on Feb 2011. The declaration was made in response to Tony’s blind accusation that Malaysia will be paying 870 percent more for the ship than other countries. Malaysian Navy Chief had explained in great length the intricacies of shipbuilding and professionally justified the cost of the ships. Readers interested for more details of his statements should visit http://www.malaysiakini.com/news/155616. FORECAST INTERNATIONAL also published an article “Increased Capability For New Malaysian Frigates” in February 2011. The article also mentioned the fallacy of Tony’s calculation on the cost of the ship and stated that the budget will be spread between two (RMK). The article asserted:

“News of the added capabilities was released in response to accusations by Malaysian Member of Parliament Tony Pua that the six ships would cost 870 percent more than equivalents purchased by other countries. He arrived at that figure by comparing the MYR6 billion ($1,975 million) cost of the six new ships with the MYR211 million ($69.5 million) paid by New Zealand for its OPVs. HOWEVER, HIS FIGURES DO NOT ADD UP. The Malaysian Navy will be paying roughly $330 million per ship for its new acquisitions. While this is a bit less than five times the cost paid by New Zealand, the ships are dramatically different in power and capability.”

Tony Pua is not “scholarship material” for defence capability planning and military science. To estimate the real cost of the ship with certainty is like trying to nail jelly to the wall. It is hidden behind the veil of complex weapon system, bonded by its own set of rules and regulations where technological changes will be transient and fixed cost illusory. Tony Pua’s attempt to decode complex weapon system procurement has not been backed by any concrete evidence other than parroting baseless comparison, which does not make sense. Information without evidence is like the cortical cataract that clouds one’s thinking and fosters the perception of negativity towards defence establishment.

Tony had also made comments, which was covered in THE MALAYSIAN INSIDER - CALL NAVAL PATROL SHIPS BY ACTUAL TERM PUA TELLS PUTRAJAYA that the LCS is a specific type of ship built to a specific length, speed and design by the US Navy. At 115-127 meters in length and 2,800 – 3,100 tons of displacement, US LCS ship designs are almost the size of a Britain Type 23 Frigates (which he purposely omitted in his recent comment). If it was to be classified base on its design they might well be classified as frigates however it is classified as LCS for it is designed to operate and employed in shallow water. Therefore the issues are not that of specific length, speed or design but the role of the ship. I could never fathom why Malaysian had swallowed whole Tony Pua’s accusations regarding defence procurement when he does not have the military training needed to qualify him to serve as a private soldier in the Malaysian Armed Forces. I am forced to worry that Malaysian politics is suffering from shortages of thinking citizens.

He had also mentioned that the Malaysian ship was shorter when compared to LCS version of US Navy. Consideration of homeport becomes fundamental in determining the ships size as homeport is the port best suited to provide maintenance and restock weaponry particular to ships of that class and build. On conclusion of a tour of duty, a combat vessel returning to port will usually return to its homeport. Should the size of the ships be bigger, than the homeport would have to be build to meet the Naval ship requirement. This could proof to be very costly and will drive the price of the ship higher. Besides the size “the Petaling Jaya Utara MP noted MINDEF officials said the top speed for Malaysia’s patrol ships could only reach 28 knots, which was lower than the 40 to 45 knots of the standard LCS”.

Speed has its advantage however it holds more threat than promise. The disadvantage is that speed requires great power. By choosing high speed the Navy has consciously chosen to accept lower carrying capacity and endurance. The impact on endurance is illustrated by the fact LCS’s cruising range of around 4,000 nautical miles (nm) at 20 knots reduces to 1,500 nm at 45 knots. Recent survey conducted by Congressional Budget Office discovered that US Navy operates LCS at relatively low speed - 10 knots or less 90 percent of the time it is under way and 30 knots or more only about 3 percent of the time.

Consequently, any mission that requires extensive use of speed will significantly limit the ship’s unrefueled time on station. Restrictions on payload and fuel capacity (including aviation fuel) mean that the LCS will require considerable logistical support for the provisioning of fuel, ammunition, perishable foods and other consumables. The Navy will almost certainly need to give greater thought to how the ships can be supported when operating at distance from base areas, including the provision of “mother ships” to support squadron operations. The support of high-speed ships requirements is just too costly for Malaysia to bear. In tactical sense, The more frequent the refueling, the more often the ship has to retire to a safe area for replenishment and the more effort should go into protecting the chain of tankers which ultimately provides the fuel. Refueling itself is always a time of increased vulnerability, for instance to submarine attack.

What Tony Pua and other opposition politician is doing reminds me of the ultimate transformation of good into evil, the metamorphosis of Lucifer into Satan. From the light bearer to a liar, an empty imposter who uses boasts, spears, trumpets, and banner, an exact description of opposition party leaders and their followers. They were the people’s light bearer overtaken to make self his only good by turning away from speaking the truth, evidenced through Satan success in tempting Adam and Eve to disobey God and be led into evil. They fear evil, but are fascinated by it. They create myths of evil conspiracies and come to believe them enough to mobilize forces against them. Benjamin Franklin once said, “Half truth is often a great lie.” They reject the “other’ as different, deceitful and dangerous because it is unknown, yet they are thrilled by contemplating sexual access and violations of moral codes. In short, Irving Sarnoff aphorism, “Evil is knowing better but doing worse”, fits best to summarized the description provided about opposition parties leaders and their followers.

The good news about human nature is about what we as individuals can do to challenge the manipulation of information that was spitted like venom to you. Every man and women is capable of resisting it and not yield to temptation. The only way to bottle that magic is by understanding, however intuitive the layers of mental organization that must be exploded to make sense of the issue. Despite having the capacity to resist most give in and only few rebel, however once you become aware of the congruence between right and wrong, you cannot see only one and not the other. “Am I capable of resisting the manipulation?” is the question that you must consider over and over again as we journey together to alien universe of defence procurement.

THE POLITICS OF OPPOSITION PARTIES IN MALAYSIA

The virtual world is flooded with comments scrutinizing the ruling government’s policies to minute details and exposing scandals of its leader by farcically exaggerating its weight. However, finding studies concerning the political strategy of the opposition parties is like looking for the proverbial needle in the haystack. The impetus of this article stems from this lack of information to trumpet the story on the politics of opposition.

Opposition party leaders often appeal to their supporter by showing their devotion to people, their commitment to the nation’s interest and a strong sense of mission and responsibility. On the contrary, beneath their mantle of charms lies the opportunistic beast, hibernating only to wake up to the wrong season by mistrust, egocentrism, and manipulativeness. They will even oppose efficient policy just to inflict reputational damage to the ruling party and will resort to reputation bashing by engaging in sabotage and negative comments forcing the ruling government to participate in an unpleasant conversation. Their ulterior motive is to increase the chances of winning the next election evidence by even a cursory examination of their behavior. In short, opposition parties are like sharks circling for traces of blood.

To exemplify the exact rendition of opposition party’s intended meaning when they oppose the ruling government’s policy, consider your work environment. You and your colleague are constantly battling over whose idea your organization should implement. A successful project raises the inventor’s chance of promotion, but a failed project ruins the inventor’s career. The winner will rise majestically on the totem pole.

How do the opposition parties in Malaysia play the game?

The first thing the opposition party will do is to disregard the ruling government’s viewpoints. The opposition party will not condensed or even acknowledge the idea. In fact, they believe that the very act of acknowledging it would give the ruling government recognition that it does not deserve. Lets look at an example how they do this to obscure you from the truth even more.

When the Prime Minister revealed the government’s budget 2012, the opposition parties quickly labeled it as an “Election’s budget” to draw support in the upcoming election. They asserted that the 2012 budget was people friendly and in an attempt to discredit it, Anwar Ibrahim produces his own national budget. However, a close examination of his version of national budget had the stamped of the orthodox International Monetary Fund (IMF) prescriptions for Malaysia when he was the finance minister during the 1997-98 Asian financial crises prior to his disgraceful sacking. Those bitter pills include pushing interest rates sky high, tightening bank lending, raising import duties and sharply cutting back on public infrastructure spending, thus putting sharp brakes on the economy. This is a clear vindication that opposition parties in Malaysia will not support government policy it believes is most likely to succeed.

The second thing the opposition party will do is to marginalize the ruling government’s opinion by characterizing it outrages. This is best exemplified in government’s approval for defense spending. If you read blogs published by opposition leaders regarding Malaysia’s defense spending you will notice a common theme echoing. The all-famous themes you hear resonating are it is wasteful and corrupted. The famous story is the purchase of 257 of 8x8 Armored Fighting Vehicle at the cost of RM7.55 billion. How did the opposition put a spin to this story to make a good plan outrages? Before explaining the method they use to spin this story, I would like to offer the reader a glimpse of defense budgeting so that you can be your own judge on what is the best way to cut the Gordian knot. It will be dry but informational.

Malaysian must understand that government spends money on its armed forces with the intent to guarantee the country’s security, more importantly its citizen against certain spectrum of risk and threats. What is vital, however are not the armed forces per se, but the capabilities they provide for the implementation of the country’s security policy. More capability means an increased ability to deter threat or to inflict damage to others who then must counter that increased ability with increases of their own. The challenge for defense planners in Ministry of Defense is the ability to answer crucial questions such as WHAT IS THE THREAT? HOW HAS IT CHANGED FROM LAST YEAR? GIVEN THIS CHANGE HOW DO WE NEED TO CHANGE FORCE STRUCTURE AND HOW MUCH WILL THIS COST? Other government departments do not have quite the same burden of reading the future and interpreting the past that Ministry of Defense annually faces in the budget process.

WHY DEFENSE ACQUISITION ALWAYS RUNS INTO THE FIGURE OF BILLION?

High technology weapon development programs are very costly due to their high R&D and infrastructure costs associated with the program. This situation is not likely to change any time in the near future. As matter of fact the only thing constant is the increase of weapon cost by 10% every year and it is expected to double every 7 years. The politics of defense equipment manufacturing is also a major contributing factor to the raising cost. The higher the cost the less countries in third world region would be able to afford it. Hence, ensuring western power to remain dominant by maintaining technology edge on the battlefield.

When the government approved funding for the purchase of 257 Armored Fighting vehicles at the cost of RM7.55 billion, opposition party member Tony Pua saw this as an opportunity to slender the government. He began to parrot to the public that the amount is exorbitant and began to pressure Minister of Defense to explain the cost. He felt proud by being able to quote the exact price of similar vehicle and made allegations that we had overpaid for our vehicles. What he did not tell you was the price he supplied was based on the basic vehicle without weapon platform, battlefield management system, chemical, biological, radiological, and nuclear capability (CBRN), state of the art communication systems and various other subsystem necessary for the vehicle to be fit for military operations. It is foolish to compare what other countries paid for their vehicle as every military in the world has its own capability model.

The third thing the opposition party will do is attack the factual basis of the government’s position. This is to further strengthen their views on the issues that seem outrageous and to appeal your support to get them elected. Their underlying strategy is to contend with the ruling government by asserting facts that they can manipulate. This is best exemplified in the issue regarding governments plan to build Littoral Combat Ship (LCS). Again all the opposition did was to highlight the cost of the project by misleading you with wrong information.  As the old saw says, “To a man with a hammer, every problem looks like a nail.” How did he manipulate this?

Tony Pua mentioned on his blog that the US only has two of the LCS but Malaysia is spending your money to buy six. Of course when we view this statement superficially it becomes outrageous but further examination would proof it other wise. The US does own two but they are seven more of those ships that are currently in production with an average cost of RM1.7 billion per ship. The plan does not stop there, as the US plans to have 55 of those ships with production plan running up to 2030. What Tony fails to mention to you was why did the government decide to build these ships. Of course, why should he, it would only proof the government’s decision to be wise and it is the exact opposite of what he is seeking. He neglected to mention the positive economic impact the shipbuilding project will have on the local in particular and the country in general.

The fourth thing the opposition party will do is attack the personality of government leader. I would like to caution you when this attack is launched because it is designed to accomplish one thing: to divert your attention away from the crux of an issue. While these attacks may begin somewhat diplomatically, they quickly descend into rank name-calling, casting aspersion on the person’s character and integrity. A good example of this is when Tony Pua published an article on his blog stating Defense Minister, Dato’ Seri Zahid Hamidi is unfit to be a minister. This is his exact comment “…we have a clueless defence minister who is arrogant, forgetful, ill-informed and ignorant.” Mind you, opposition often employs this tactics when someone’s viewpoint gains traction with the people.

Another claimed he made was, “It is extremely worrying that the country’s Defence Minister is relying the country’s intelligence from a blogger who is an obsessive liar without any morals and ethics. In fact all Malaysians should be terribly concerned that our Defence Minister who wields great powers, can be so gullibly compromised by a writer of unbelievable and outlandish fiction.” This statement was in response made by Zahid on information he received that Tony is a foreign agent. Any Tom, Dick and Harry would know that a Defense Minister receives his daily intelligence briefing from Military Intelligence Department not from a blogger. What he is doing here is to discredit comments made by Zahid about him by associating Zahid with unreliable source. At the very basic, you and I must understand the difference between information and evidence. It clear to me all Tony had provided on his blogs are just information which has a bunch of flavors but no substantial core. 

The question now is who are we to trust? So far, all of the information supplied by Tony Pua has been manipulated to obscure you and I from reality. Tony’s statements are just his perception which models reality, a myth, which comforts society and his stories, is nothing more than a flight of fancy. I know everybody needs some kind of fantasy to go on living, but Tony, keep this one in the privacy of your own thought. I find it remarkable how hard it is for Tony Pua to make the connection between truth and trust, even though they are the foundations of our most important relationships, like friendship and marriage. Henry Clay once said, “Government is a trust…” when those politicians repeated tell the public what the public can plainly see isn’t true, the trust is broken. Tony Pua and his DAP can’t seem to grasp that connection; I sure hope you do!

To conclude, we should ponder on the writing of Alexander Hamilton “Men often oppose a thing, merely because they have had no agency in planning it, or because it may have been planned by those whom they dislike.” This is the exact description of Malaysia’s opposition party especially Tony Pua which has biases and arises not only from personal failing but also from rational calculus of his vote seeking oppositional politics. This is the reason we should not rely on the opposition to guard against errors made by government instead we have to rely on change of personnel to correct the policy. MALAYSIAN THAT FOLLOWED THE LAST UMNO GENERAL ASSEMBLY BEARS WITNESS TO THE STATEMENT MADE BY PRIME MINISTER THAT CHANGE OF PERSONNEL IS EXACTLY HIS NEXT Course OF ACTION.

PARLIAMENTARY OVERSIGHT COMMITTEE OVER DEFENCE EXPENDITURE

Tony Pua, based on the report made by Transparency International (TI) is vehemently advocating the need for Parliamentary Oversight Committee over Defense Budget. He justified the urgent need to have this committee established on the report made by TI, which scores Malaysia well below the failure mark. WHAT IS THE PROBLEM WITH HIS PROMULGATION BASED ON TI’s REPORT?

The first problem emerged from the limitation of the report admitted by Transparency International, which Tony Pua neglected to mention. The report states, “This is an initial review of a deeply complex subject. The low to high measurement scale gives an indication of a country’s defence budget transparency, but it has limitations, and the information it provides is not sufficient to draw definitive conclusions about countries’ individual areas of strength and weakness.” Since the report is inconclusive the study provides no persuasive evidence that Malaysia’s Defence Budget lack transparency and accountability as suggested by Tony Pua. Hence, a theory however elegant or economical must be rejected or revise if it is untrue.

The second problem is his statement, mentioning that countries with strong democratic system in place scored high in the report. These countries made it seemed, as they were transparent with their budget unfortunately everything registered was an incomprehensible chaos. For example UK, the estimates provided to parliament still lacks details and financial information provided was mainly a single line items bundled together with dozen of other spending, which authorizes billions of pounds. Even Australia, once a pioneer of outcome based appropriations, has run into serious problems when a recent OECD study confirmed that they make it impossible to determined what exactly money is appropriated for. It is unimaginable a country stamped with the mark of strong democratic system is withholding information and providing appropriation without the detail spending. That’s why it is important for Malaysians to be very cautious when reading articles that comments on defence related issues. Without care even the act intellectual inquiry is itself demonized. The ultimate cost of transparency is information manipulation, which is further elaborated in the section below.

THE UGLY TRUTH OF THE POLITICS OF TRANSPARENCY

The transparency issue brought up by Tony Pua is only an attempt at garnering political support. The opposition party he belongs to is only a social entrepreneur that is portraying that they are engaging in the game playing by its rules. The fact that they refrain from naming any real grievances they are set to fight (apart from the lack of transparency, of course) seems as quirky as their reluctance to fix a political agenda and their declaring themselves mere vehicles of change.

Malaysians must be critical in questioning does transparency really evoke openness, integrity and honesty? “We should be very careful in treating transparency as an economic or political cure-all,” says Jacqueline Best, assistant professor of political science and author of the forthcoming book The Limits of Transparency: Ambiguity and the History of International Finance, published by Cornell University Press. Her warning coincide with the recent study conducted by Viviana Stechina from Uppsala University in Sweden which reveals that transparency does not necessarily lead to less corruption, integrity and honesty. As matter of fact, it has other unintended consequences as suggested by the sociologist Frank Furedi the author of On Tolerance: The Defence of Moral Independence.

Frank Furedi mentions that the advocates of total openness claim that transparency empowers all citizens, since it allows them to hold their governments to account for their actions. They also claim that a regime of full disclosure is the precondition for overcoming public mistrust. Yet experience shows that transparency has turned into a ritual of hypocrisy. Moreover, the institutionalization of transparency encourages dishonesty and deception, which in turn fuels even more confusion and suspicion. 

He warns that the practice of cult transparency often leads people to avoid giving an honest opinion for fear of being accountable. In such an environment, people have little incentive to acknowledge mistakes, and typically we see the emergence of regimes of responsibility-aversion. It is difficult for individuals to throw out ideas or express unconventional views when they court being ridiculed or stigmatized by their public critics, who have no stake in the outcome of their deliberations. Transparency will indefinitely encourage a climate of organizational caution and conformity, which ultimately discourages the clash of opinions and diminishes the potential for the open clarification of problems. That is because people are unlikely to take risks and disclose their real concerns when they know they are effectively doing so in front of the whole world.

Back in 1946, George Orwell reminded us that When politicians who, in their heart of hearts, understand the perils of transparency still insist on performing its rituals, the corruption of thought is clearly no less a problem in 2012 than it was in Orwell’s time. It is not a surprised former British Prime Minister Tony Blair wrote in his memoir that one of his biggest mistakes was to introduce the Freedom of Information Act. He said ‘it is a dangerous act’ because it made it very difficult for a government to debate the serious issues of the day ‘in confidence’. You ‘naive, foolish, irresponsible nincompoop’ is how he described his own role in the enactment of this legislation. 

PARLIAMENTARY OVERSIGHT COMMITTEE

The evidence provided has clearly illustrated that transparency is seductive but too dangerous to apply. The Parliamentary Oversight Committee for Defence battened by Tony Pua into a concept of “more information better decision” has been falsely presented as novel but in reality it has only deepened the dilemmas created by his sloppy thinking. The highly complex nature and environment of defence sector that are often too technical for members who have not had earlier military experience will present a difficult challenge for effective exercise of oversight. For instance, in January 2003, Parliament approved USD 55 million for the Ministry of Defence to “acquire equipment including helicopters to facilitate Ghana’s participation in UN peacekeeping operations” in the Democratic Republic of Congo. Yet, the original estimated cost for these helicopters, contract provisions for training personnel, and provision of spare parts and tools was only USD 19,695,600.

Even more decisive are members’ attitude and acumen in relation to defence sector. Tony Pua and members of the opposition party has never raised any questions that truly addressed defence concerns other torpedoing the cost. The lack of expertise on defence issues will undermine their oversight and decision-making functions. For example, the parliamentary defence committee in South Africa accepted the logic of non-offensive defence as a matter of policy but it also accepted the recommendation by military officers for an offensive force design, mainly because the parliamentarians could not understand the technicalities of the force design options that were put to them. Similarly, the parliamentarians have struggled to grasp the technicalities of defence budgets.

Defence establishment around the world are not keen on transparency because it is seen as an instrument of intrusion, which can in turn increase vulnerability. This vulnerability is attributed to the theory that military resources produce behavioral outcomes. In general, analyst looks at strategic resources such as budget, manpower, military infrastructure and institutions, defence industries and inventories. They then look at factor that affects conversion capability such as strategy, doctrine, training, organization and capacity for innovation. Finally, they judge combat proficiency in detailed dimensions of ground, naval, air and for some countries spaces. Transparency in defence appropriation will enable the enemy to predict our military capability with needle like precision and prepare a more effective response to our detriment. As a result of this, many countries detest to the idea of transparency to avoid vulnerability. We must remember metaphorically speaking, military power provides a degree of security that is to order as oxygen is to breathing; little noticed until it begins to become scarce. Once that occurs, its absence dominates all else.

In conclusion, opposition members like Tony Pua rarely feel responsible for the bad that their fantastic new reform effects. Their focus is always on the good and the bad is someone else’s problem. As we see the consequences of changes that many of us view good, we might wonder whether more good might have done had more responsibility been in the mix. We should also recognize the collateral consequences of that good need not itself be good. And if that collateral bad Tony Pua is certifying to Malaysian public what he thinks he already knows, we should think carefully about how to avoid it. Sunlight may well be a great disinfectant. But anyone who has ever waded through swamps knows, it has other effects as well.

THE OTHER SIDE OF THE STORY (PART II) – RM6 BILLION NAVAL VESSEL PROJECT

This is the second part of my response to comments made by Tony Pua on his blog entitled Purchase of 6 Naval Vessels up from RM6 billion to RM9 billion.

SPARING THE ADJECTIVE – DIRECT RESPONSE TO TONY PUA’S COMMENT

Tony Pua had stipulated that the Ministry of Defense must explain the cause of the sudden increase of RM3 billion in the purchase of 6 naval vessels. I can understand his concern regarding the escalation of the cost but the object of my repugnance is his manipulation of the information regarding the LCS in his blog.

He mentioned, “The US owns 2 of these ships - USS Independence and USS Freedom while Malaysia is seeking to acquire 6 of these LCS.”

It is not a well-guarded secret that the US Navy has only commissioned 2 LCS ships but there is more than meets the eye about these LCS. Currently the US Navy has 7 more of this LCS in production (USS Fort Worth, USS Coronado, USS Milwaukee, USS Jackson, USS Detroit, USS Montgomery and the latest being USS Little Rock). It is part of their larger plan to replace 30 FFG-7 Oliver Hazard Perry Class frigates, 14 MCM Avenger Class mine countermeasures vessels and 12 MHC-21 Osprey Class coastal mine hunters with 55 Littoral Combat Ships. The US Navy estimates the total acquisition cost for 55 LCS sea frames (the term navy uses to refer to basic ship without any modular mission package) are USD37 billion (RM116 billion) which will run through 2030. I don’t expect Tony to know the details of the US Navy LCS program but his ignorance does not give him the liberty to put positive spin on abysmal US Navy shipbuilding record.

Tony wrote “it has come as a shock when Boustead announced on Bursa Malaysia that the contract which was just signed last week is now valued at RM9 billion or 50% higher that what was approved earlier this year by the Government.”

The most important thing for us to know is – there is no simple or universally agreed model for predicting the cost of designing and building a warship. The reason for this is there are too many independent variables that affect the final cost. For me to explain the economics of buying complex weapon system is beyond the scope of this response. Therefore, the US Navy LCS Program serves as the best example to illustrate the complexity of finalizing cost for any warship program.

In January 6^th 2006, the US Navy stipulated that the LCS was to cost no more than USD220 million (RM691 million) each, plus adjustments for inflation and other factors. However in January 28^th 2008, the Navy amended the cost cap to USD460 million per ship (RM1.4 billion) with no adjustments for inflation. Then, in 28^th October 2009 the Navy had decided to adjust the cost to USD480 million per ship (RM1.5 billion), which includes provisions for adjusting the figure over time to take inflation and other events into account. As at December 2010, after taking inflation into account the cost of LCS is at USD538 million (RM1.7 billion) per ship. This is an escalation of cost of more than 100% from initially projected. In this narrow sense, Malaysia is far better off in estimation than our American friends. Even with the additional RM3 billion and with a small quantity Malaysian LCS is much cheaper than the US LCS.

Tony also mentioned this “Boustead Naval Shipyard, previously known as PSC Naval Dockyards which delivered the previous 6 naval patrol vessels at RM6.75 billion or 26.2% above the original contract price of RM5.35 billion. The ships were also delivered only after a 2 year delay and hundreds of defects.”

My first reaction to this information he supplied was “WOW – for a company guided by the government with little experience in building naval ship this is an achievement that merits a standing ovation!”  I had come to this reaction knowing for a fact that we did better than a country with 30 years of experience in building scores of warships, which includes aircraft carrier, destroyer and submarines. When the United States Navy embarked on LCS program on 1^st November 2001, it was heralded as the dawning of an innovative, low-cost era in Navy shipbuilding. On the contrary, it has turned into a case study of how not to build a combat ship. The USS Freedom was delivered to US Navy fleet after 5 years delay with USD400 million (RM1.3 billion) over its original cost estimate. To make matter worst it was commissioned with none of its robotic ready for combat. USS Independence was running at 220% over-budget with the total cost for the ship of USD704 million (RM2.2 billion). Ultimately, there were nearly 600 significant engineering changes affecting nearly all parts of the ship. The bills per ship soared to USD531 million (RM1.7 Billion) more than double the original bill of USD220 million (RM692 million). It does not take a genius to realized 2 years delay is better than 5 and 26.2% above the original contract price is lower than an over budget of 220%.

Last but not the least Tony Pua’s also commented “As Defense expenditure in Malaysia remains highly opaque, with Malaysia ranked "medium to low" in transparency by Transparency International, we continue to call for a Parliamentary Oversight Committee to review and approve defense expenditure as practiced in all developed countries.”

I had offered the benefit of my thoughts on the intricacies of Defense Industry in my article entitled INFORMATION FALLACY. Therefore the focus of my response this time will be on matters pertaining to Naval Shipbuilding. The view I offer is for the readers to make their own conclusion on the viability of the comments made by Tony Pua.

Australia’s naval shipbuilding is based on Single Shipbuilding Entity Model which means only a single shipyard would provide the government with all of its naval procurement, repairs and upgrades needs for the life of the contract. The decision to adopt this model was made after a long and extensive study that reveals competitive bidding for shipbuilding would in the future place a significant cost on the Australian government.

The benefit of this model is that a single supplier is likely to achieve better scale and utilization rates than two or more suppliers. The stability of single supplier would encourage the retention of highly skilled labor, which in turn would lower the training and costs on additional projects. By using the same shipyard for repairs and upgrades government could take advantage of a the skills attained during construction phase which would increase labor efficiency. Simply put, same people that built it would be the ones effecting repairs and upgrades. Finally the single entity model would make contract tendering less expensive and time consuming, as it would involve only one company. In the long run the government saved money and was able to lower the cost of naval shipbuilding.

Students of Defense Economics understand all too well, that the reason naval shipyard around the world was able to maintain itself was only through extensive use of government subsidies, which in some cases are in excess of 40 percent of the cost. The incentives are offered for variety of reasons. One motive is job protection and the strategic importance of shipbuilding industry. Some governments, such as the US have stated that assured access to shipbuilding facilities is matter of national security.

The diversity of example I supply demonstrates that Malaysia is not doing something out of the norm. We are simply benchmarking the global naval shipbuilding standard, which is practiced not only in Australia, but the same model has been adopted by Canada, France and Germany with slight variation. The strategic interest in maintaining a viable naval shipbuilding is important to the country; hence our government is simply implementing the most economical way to preserve the industry. In short, it was the making a virtue of necessity. 

TONY I HOPE YOU ARE TUNE IN

The title of Tony’s blog is Philosophy Politics Economics for Family & Friends, For Community & Country. Your family and friends may tolerate being manipulated by you but I can’t stand when someone is trying to manipulate the country and its people by using political rhetoric to make his lies truthful. This alone, to me, is an act of treason. My personal advice to you Tony is that you should stop making comments on matters that is beyond your bailiwick and just stick to issues that is not a stranger to you. You must also try your very best to persuade yourself not to attempt useless acts of heroism. I know this is difficult as a career politician but you must try so that we can honor you one day as a patriot not despise you as an opportunist. People don’t have to like you Tony, but it is vital you get their respect in order for you to be heard. And ultimately you must be prepared to put what you perceive to be the common good of the nation before your own political self. That is you as an individual take second place to the interest of the nation as a whole not vice versa. The comments I made about you are not baseless; I am an avid reader of your blog and find many of your comments are just attempts to give an appearance of solidity to pure wind.

THE OTHER SIDE OF THE STORY (PART I) – RM6 BILLION NAVAL VESSEL PROJECT

This write up is in response to the comment made by Tony Pua on his blog entitled Purchase of 6 Naval Vessels up from RM6 billion to RM9 billion. We live in an increasingly sophisticated world that makes it difficult to make simple comments on issues. The problem is, there are too many people on both sides of the border who are taking advantage of circumstances and the situation. It is important that we understand just as there are two side of every coin; there are also two sides to every story. I hope to offer you a view of the other side, which will be examined through the lens of geo-political strategic climate (Part I) and the mechanics of Naval Architecture (Part II). It is all together proper and fitting I do this in order to provide a map for the people with no insight into the labyrinth of Naval Warfare.

In primis, the question that should be lurking in our mind should not be that of the cost but Why is it necessary for Malaysia to build the ships? 

There have been many predictions by experts that the next power plays will be in the Indian Ocean. This prediction is based on many facts gathered by studying the development of Indian and China naval build up. As we are very well aware, the Indian Ocean is the third largest body of water and encompasses the entire arc of Islam from the Sahara Desert to the Indonesian archipelago. The Indian Ocean constitutes a network of dynamic trade as well as a network of global terrorism, piracy and drug smuggling. Hundred millions of Muslims live along the Indian Ocean including Malaysia.

The Indian Ocean is dominated by the immense bays, the Arabian Sea and the Bay of Bengal (the most turbulence part in the flight path to London), near the top rest two most unstable countries in the world: Pakistan and Myanmar. The collapsed of the present regime in these two countries would threaten economies nearby and require a massive seaborne humanitarian intervention. Looking at this scenario, China and India has been compelled to redirect their gazes from land to the seas. The very fact that they are focusing on their sea power indicates how much more self confident they feel on land. And so a map of Indian Ocean exposes the contours of power politics in the 21st century.

Throughout history, sea routes have mattered more than land routes, because they carry more goods economically. The adage "Whoever is lord of Malacca has his hand on the throat of Venice" remains relevant to date, as 90% of global commerce and about 60% of all oil travel by sea. Moreover, 70% of the total traffic of petroleum products passes through the Indian Ocean. As these goods travel that route, they pass through the world's principal oil shipping lane, including the Gulf of Aden and Oman, as well as some of world commerce's main chokepoints: Bab el Mandeb and the Straits of Hormuz and Malacca. 40% of world trade passes through the Strait of Malacca. Already the world's preeminent energy and trade interstate seaway, the Indian Ocean will matter more in the future as global energy needs are expected to rise by 45% between 2006-2030. China is expected to import 7.3 million barrels of crude per day and more than 85% of the oil and oil products bound for China cross the Indian Ocean and pass through the Strait of Malacca.

These facts lead to India enlarging its navy. Currently India boast its navy with 155 warships, the Indian navy is already one of the world's largest, and it expects to add 3 nuclear powered submarines and three aircraft carriers to its arsenal by 2015. This build-up is alarming to China as it is also concerned about protecting its interest through the region. The Chinese government hopes to eventually bypass Strait of Malacca by transporting oil and other energy products via roads and pipelines from ports on the Indian Ocean into the heart of China. One reason Beijing wants desperately to integrate Taiwan into its dominion is so that it can redirect its naval energies away from the Taiwan Strait and towards the Indian Ocean. The Chinese government has already adopted a "string of pearls" strategy for the Indian Ocean. It is building a large naval base and listening post in Gwadar, Pakistan (China-Pakistan are in good relationship whereby India has strong ties with Iran) from which it may already be monitoring ship traffic through the Strait of Hormuz. Beijing also operates surveillance facilities on islands deep in the Bay of Bengal. Besides this, the Chinese government is also envisioning a canal across the Isthmus of Kra in Thailand, to link Indian Ocean to China's Pacific Coast. This project on the scale of the Panama Canal and one that could further tip Asia's balance of power in China's favor by giving China's burgeoning navy and commercial maritime fleet an easy access to vast economic continuum stretching all the way from East Africa to Japan and the Korean Peninsula.

All of these activities are unnerving the Indian Government and it is safe to say that India is perhaps China's most realistic strategic adversary as Beijing already considers New Delhi to be a major sea power. As the competition between India and China suggests, the Indian Ocean is where global struggles will play out in the 21st century.

All this has great implications on the Malaysian naval posture. The government of Malaysia is interested in a pipeline network that would link up ports in the Bay of Bengal with those in the South China Sea. To be sure, as sea power grows in importance, the crowded hub of around Malaysia, Singapore and Indonesia will form the maritime heart of Asia: in the coming decades, it will be as strategically significant as the Fulda Gap, a possible invasion route for Soviet tanks into West Germany during the cold war. Navies exist to protect economic interests and the system, in which these interests operate, and by building vessels our Defense Ministry is looking in the right direction and the ministry is pursuing this matter urgently. It has to do so as the country's economic interests expand dramatically, so must Malaysia Military particularly the navy, to guard these interest.

The principle behind the focus of building fleet is attributed to the fact that ship cannot be in two places at once, the fewer the vessels, and the riskier every decision to deploy them. There comes a point at which insufficient quantity hurts quality. In the background of this strategic analysis, the Royal Malaysian Navy under the guidance of Defense Ministry is wisely focusing their buying on the real security and economic interest of the country. The more they become an object of scrutiny the longer the delay and this delay can be toxic in its effect. To question the cost of the vessel is the right of every Malaysian however it holds in store more threats than promises to the country.

In Part II, I will elucidate the challenges faced by any country when it comes to building naval vessel. This much I can say now, at least we did not make the costly mistakes the American did when they were building their vessel in 2008.

To conclude Part I of my response, I would like to quote the American military theorist in 1890 when he published The Influence of Sea Power Upon History, 1600-1783, he argued that the power to protect merchant fleets had been the determining factor in world history. Malaysia is adapting to his theory as both Chinese and Indian Naval strategist read him avidly nowadays! We are sailing in the right direction, and for those who have never rowed a boat should not try to steer our ship in a different direction!

SELF INTEREST

Someone once told me that the word Poli means many and ticks means blood-sucking animal. The solemnity and the scope of what took place with the recent NFC scandal left no doubt in my mind that the word Politics, really means many blood-sucking animal. However, understanding of human behavior not the party is fundamental to comprehend the machinations that formed the current scandal. After all, it is human that breaths life into the party and not vice versa.

David Hume once said, “Man is motivated by and only by self-interest. Only considerations of utility can sway man to act one way or another.” Therefore, you can put any party to run the country but as long as it’s human the quotation will always be relevant. For example, I had recently tried to respond with a comment to an article entitled Call for Parliamentary Select Committee on Defence, which was posted on Tony Pua’s blog. The comments I tried to post were a sincere view of the issue, which was not meant to serve any political agenda or support any individual. Unfortunately, it was not posted on his blog because it does not serve his interest even though my comment may serve the interest of the public. It was not a surprised to me that when I browsed his blog further I stumble upon comments posted which, only supported his agenda but more importantly his interest. The only way to understand why he made such decision is to understand the incentives he face hence his preference for one outcome versus another.

Understanding human behavior also means that whoever is responsible for the NFC scandal should not go unpunished. The tactics of cover up these days are old school. Today people are more upset about government covering up something or saying one thing and doing another. In short, people don’t like the feeling of being lied to and with the case of NFC; this is exactly the feeling of the Malaysian people. Apart from this, the NFC scandal carries cost to reputation, because reputation is much harder to clean than to tarnish. This is why to right this wrong, the government needs to give more than what they think is fair, and it is obvious that the only place to gauge what is fair is by asking and listening to what the Malaysian people think is fair. This is important, as it is a known fact that people judge trustworthy based on the organization’s reputation. It also important to the organization as preserving reputation helps keep honesty and suppresses the incentive to act on bad intentions. In short, punishing wrong-doing keeps people in line and promotes cooperation.

Commonsense insists that people have reasons for what they do and this may be true. But it doesn’t necessarily allow us to predict in advance either what they will do or what their reason will be for doing it. Once they do it, of course, the reasons will appear obvious just like my incidents with trying to post comment on Tony Pua’s blog. We think change is beneficial but it could also be disastrous given the fact that we don’t have the ability to predict the outcome. We have the impression that our particular beliefs are all derived from some overarching philosophy, but the reality is we arrive at them quite independently and often haphazardly. We feel we are so advanced and yet we cannot unravel a simple knot tied by a part time mathematician working alone without a computer – Fermat’s last theorem puts things in perspective. This is why it is not strange that we have the tendency to mistake change for progress.

INFORMATION FALLACY

 Recently, I had stumbled on a blog administered by Member of Parliament Petaling Jaya Utara, Tony Pua (DAP). As I was browsing his blog, I found an article entitled Call for Parliamentary Select Committee on Defence. Being in the industry for more than 15 years, the article incited my interest, as there are many fallacies in its argument. The article quoted Transparency International (TI) score on Malaysia’s defense expenditure well below the failure mark. Director of the International Defence and Security Program for TI in United Kingdom, Mark Pyman was quoted in the article saying, “Malaysia ranked far below other countries (for this), where the budget lacked details and no audits were undertaken of the secret programs.”

Many of us including defence contractor in Malaysia are not familiar with the intricacies of arms deal. I don’t blame them because the kingdom of arms deal revolves around a shadow world. This is the reason why many people like Tony Pua would take Mark Pyman’s comment to be true even if its misleading. They need to know that defense business conducted by countries like US, UK, France, Germany and many others are done in what the industry term as “Grey Market.” This means that the deals are conducted through legal channels but undertaken covertly often utilized by government to have an unlawful impact on foreign policy. This system is in place to obscure information on defense activities made by these governments often to fund illegal activities.

With secrecy de rigueur there are very few arms transaction that are entirely above board. For example, in 2009, UK Ministry of Defense had censored information to conceal an official report from exposing profligacy in defense procurement. Lets look at Canada, the purchase of the new F-35 jets with the cost of USD18 billion without an open competition from aircraft maker. This procurement when done will be Canada’s largest defense procurement in history. Where is the transparency in that deal? Booz Allen Hamilton headquartered in McLean, Virginia was awarded contracts worth more than USD3 billion by the Pentagon and 26% of them with no open bidding process. Where is the transparency in that deal? What about the fact that within a year George W. Bush assuming the presidency, over thirty arms industries executives, consultants and lobbyist occupied senior position in his administration. Half a dozen of those senior executives are from Lockheed Martin and they were given crucial position in his administration. As a result of that, the company was awarded by Pentagon the biggest Military contract in US history.

Therefore, “The budget lacked details and no audits were undertaken of the secret programs,” echoes the overall tone of any report that attempts to scrutinize arms transactions. These countries have a defense budget larger than the total budget of Malaysia and much larger interest in foreign policy of the world. The only way to pursue their policy goal is by keeping their defence transaction in the “Grey Market” area. I don’t see how these countries would be any better than Malaysia when it comes to being transparent in their defense expenditure. Ronald Reagan once said, “Trust but verify.” My advice to all of you is to do the same especially on matters regarding defense related issues.