Asia's monetary woes scuttle weapons sales

Asia's monetary woes scuttle weapons sales

KUALA LUMPUR (AFP): The financial crisis sweeping Asian
economies may reduce regional arms purchases as prices of
military hardware escalates, military analysts say.

The crisis has also led to the withdrawal of seven companies
from the Langkawi International Maritime Aerospace Exhibition
(LIMA) '97 starting Tuesday in Malaysia's northern resort island
of Langkawi.

They include five foreign companies including two from the
United States and one each from Belgium, Russia and Australia,
said organizer Le Proton's senior manager Megat Nawawi Megat
Hamid.

Seven other companies have also reduced their exhibition
spaces while two Russian companies have reduced the number of
aircraft for the show.

But Megat Nawawi said the "currency crisis has not affected
the exhibition proper."

Some 800 exhibitors from around the world will participate in
LIMA '97 which will focus on the maritime sector. It will see a
massive gathering of naval flotilla for public display with 42
surface ships and four submarines, including the French Agosta
class submarine manufactured by French-based Naval Dockyard.

Megat Nawawi said there may not be any "real deal" for
aircraft purchases although "many Asian defense officials would
shop to see what latest equipments are available."

Deals worth 2.5 billion ringgit were signed during the 1995
LIMA exhibition and "I am optimistic we can hit a similar
figure," he said, adding that 16 civilian aircraft purchase
agreements would be signed this time.

A defense analyst, however, ruled out any outright purchases
of military hardware at the LIMA exhibition and said "sales of
military, executive and leisure aircraft will suffer."

"The economic crisis will influence a lot countries to put off
their plans for new arms purchases," said Razak Baginda,
executive director of the Malaysian Strategic Research Center.

"The region may take stock of what military hardware it has
and probably will emphasize maintenance and upgrading of existing
hardware only," he said.

A naval analyst close to the Malaysian defense ministry said
the decline in regional currencies was a definite blow to new
arms purchases.

"All military purchases are done through hard cash. Some
regional economies are at the brink of bankruptcy. When countries
do not have money, they won't have ambition," he said.

Citing Malaysia's intention to acquire eight British-made Lynx
helicopters, he said the total cost had surged 75 percent to
about 140 million ringgit (US$40 million) because of declines in
the ringgit's value against foreign currencies.

"Malaysia now has to say: hold on," he said, adding, however,
that small purchases of military equipments would not be
affected.

The currency and stock market turbulence has clobbered the
Thai, Indonesian, Philippines, Malaysian, South Korean and
Japanese economies.

Since July 2, when Thailand effectively devalued its currency
and triggered the crisis, the U.S. dollar has gained an average
of 38 percent against five key Southeast Asian currencies.

It has risen some 60 percent against the Thai baht, 50 percent
against the Indonesian rupiah, 39 percent against the Malaysian
ringgit, 31 percent against the Philippine peso and 12 percent
against the Singapore dollar.