Malaysia says report on warship deal speculative

Malaysia says report on warship deal speculative

KUALA LUMPUR (AFP): Malaysia's defense minister has dismissed a news report which suggested Kuala Lumpur might use a proposed warship contract as a trade weapon against Canberra.

A report from Canberra carried in local newspapers had cited the Sydney Morning Herald as saying a leaked document from Australia's Foreign Affairs Department, while backing a plan for the joint construction of 30 patrol ships, raised fears the contract might have unwanted trade implications.

"This is quite speculative. The Australians will be invited like everyone else to submit a proposal and compete on a level playing field," the minister, Najib Razak, told reporters.

He said all bids would be in by year-end and Malaysia would decide on the award of the contract by mid 1995, with the first ship to be built in Malaysia.

According to the Australian report, the ships are estimated at 148.8 million ringgit (US$59.5 million) each, making the contract worth 4.46 billion ringgit. Eighteen of the 1,200-ton patrol ships are slated for Malaysia.

Despite mutual benefits, "the possibility that the Malaysian leadership could see the project as a point to apply pressure on us could not be ruled out completely," the Herald reported.

But the report added that benefits outweighed risks.

The Australian Foreign Affairs Department refused to confirm or deny the existence of the document.

Malaysia-Australia ties have undergone rough patches in the last few years. Australian Prime Minister Paul Keating last year had to apologize for calling his Malaysian counterpart Mahathir Mohamad a "recalcitrant" for opting out of the summit of the Asia Pacific Economic Cooperation forum in Seattle.