Fitting way to stretch defense budget

V.K. Chin, The Star, Asia News Network, Selangor, Malaysia

The decision to buy Polish tanks is a positive move as Malaysia cannot depend solely on traditional manufacturers to fill its defense needs. The Government has relied for too long on the Western suppliers and having to pay a high price for such purchases.

Prime Minister Datuk Seri Dr Mahathir Mohamad announced Malaysia's intention to buy the tanks during a recent visit to Poland. The sale will be a coup for the Poles, who pulled out all stops to demonstrate to the Malaysian delegation the versatility and suitability of their products.

Apart from the technical aspects of the tanks, one key factor concerning all such transactions is that of price and the method of payment. While price is decisive, of equal importance is on how the purchase is to be paid.

In this instance, the attraction is that this can be done not only in cash but in kind as well. The manufacturers are prepared to accept commodities and other products in partial settlement. This is a system that many Western companies are not prepared to accept as they must go to the trouble of finding buyers for such goods.

Cash is so much more convenient and less troublesome. However, sellers from developing nations are prepared to use the barter system to buy what they need from interested buyers. The benefit of this way of doing business is that the minimum of foreign exchange is involved.

Some countries may be rich in natural resources but rather short of foreign exchange to buy the goods they require and so to them this is an ideal way of doing business. This is also one way of helping to dispose of products during difficult times.

The Government has been sourcing its defence equipment from non-traditional suppliers as this is one way of stretching its expenditure on defence. Manufacturers of less-advanced countries, but with the technical know-how, are prepared also to price their products competitively.

After all, Malaysia's defence needs are modest and there is no necessity to buy state-of-the-art equipment. The weapons are meant for defensive purposes only as Malaysia has never been the aggressor against any other state.

It is therefore a sheer waste to buy sophisticated equipment when there is no necessity to have such weapons except for prestige. In this way, it has managed to stretch the defence budget and isstill able to replace the ageing equipment at a minimum cost and without compromising security.

Under this prudent approach, the Government has equipped its air force with Russian-made jet fighters and helicopters instead of US-manufactured models. Russia also has sweetened the deal with an attractive package and technology transfer.

In buying weapons from the Eastern European countries, the deal is not subjected to scrutiny from their own people unlike in the case of the United States where almost every such transaction is being questioned by its congressmen.

Sometimes, Congress can even reject a done deal making it impossible for the manufacturer to deliver its equipment to the buyer. This is of course unheard of where the former communist states are concerned as their governments have a complete say on such matters.

In fact, their citizens look forward to such deals as they mean jobs for the people. In buying weapons from such non- traditional sources, the Government must ensure that the arms must not only be suitable for its defence requirements but the after-sale service also must be there to keep the equipment operational for as long as possible.