Leasing helicopters allows the country to acquire defence assets more quickly and is a more financially viable option than purchasing them, says Defence Minister Datuk Seri Khaled Nordin.
During his ministerial winding-up speech on the motion of thanks for the royal address in the Dewan Rakyat on Thursday (Feb 20), Khaled explained that leasing enables the government to obtain high-cost, sophisticated, and modern assets without upfront payment.
He added that financial commitments would only begin once the helicopters are delivered, making it a more practical approach to strengthening the nation’s defence capabilities.
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During his ministerial winding-up speech on the motion of thanks for the royal address in the Dewan Rakyat on Thursday (Feb 20), Khaled explained that leasing enables the government to obtain high-cost, sophisticated, and modern assets without upfront payment.
He added that financial commitments would only begin once the helicopters are delivered, making it a more practical approach to strengthening the nation’s defence capabilities.
Read more at https://tinyurl.com/2jwe4t2f
WATCH MORE: https://thestartv.com/c/news
SUBSCRIBE: https://cutt.ly/TheStar
LIKE: https://fb.com/TheStarOnline
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NewsTranscript
00:00There is a lot of criticism and reports out there that insist that the country needs to have modern and strategic assets,
00:11but the country is not trying to realize it.
00:16This brings us to a situation that is often referred to by experts and defense personnel as
00:25lease or do without situation.
00:29That is, a situation that requires us to either lease or we have to be satisfied not to have new assets.
00:41In other words, if we wait only to acquire assets through direct purchasing,
00:53it is impossible that we will have to wait longer.
01:00Or maybe we will not have the strategic assets that the country needs forever.
01:12On the other hand, if we choose tax approach, the government does not have to pay compensation,
01:20or pay advance payment, or progress payment with permission,
01:25or issue capital payment, capex.
01:30This is because under this helicopter tax contract,
01:35the government will only start to pay the commitment when it has received a fully equipped helicopter.
01:46And even that, the payment is monthly, according to use, and divided over a period of 15 years.
01:59On the other hand, if we buy these assets directly,
02:04we need to issue costs and make payments starting from now,
02:10even though we do not have the assets that are required.
02:15And we must pay all the payment before we can receive any assets.
02:24This means that through tax approach,
02:28the government can acquire high cost, advanced, and modern assets,
02:34such as helicopters, without having to provide a large deposit at once,
02:40or with up-front, full payment.
02:44Therefore, based on the reality of insufficiency and low level of asset availability,
02:51and the lack of continuous government funds,
02:54we choose to get the assets that are required using tax approach.
03:02The second reason why we choose this tax approach,
03:06is because of the issue of asset availability, such as helicopters.
03:14We found that the issue of serviceability, or the availability of assets,
03:23is a serious challenge that we are facing all this time.
03:30In this issue, a study by the University of Technology Malaysia in 2017,
03:36revealed that the level of serviceability of the aircraft owned by TUDM at that time,
03:44was not optimum and not as established.
03:49This study found that the level of serviceability of available aircraft
03:54was only 43% compared to the minimum 70% required.
04:02In fact, agencies such as the Royal Malaysian Police,
04:07the Ministry of Defence, and so on,
04:09also experienced the same issue,
04:12as a result of an inefficient implementation and repair process,
04:18and the incidence of accidents or serious damage.
04:22This is because, as we all know,
04:24even if we own these strategic assets,
04:29it is still a challenge to get the replacement equipment,
04:34and the repair process that takes time,
04:39which cannot be avoided.
04:42Therefore, from this reality,
04:46one of the main factors that is stressed,
04:49and becomes a factor of the government's tax approval,
04:55is the necessity on the part of the company,
04:58to provide a guarantee of the level of aircraft serviceability.
05:04We require that the company is obliged to ensure
05:10that the minimum aircraft serviceability is at least 85% at all times.
05:19Previously, our assets were only available at 40-45%,
05:26when we own them.
05:28But when we use the overall tax approval,
05:35the requirement must be 85%.
05:40For more information, visit www.fema.gov