Malaysia cancels EC725 deal due to tight budget

Singapore
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Malaysia's plans to buy 12 Eurocopter EC725 utility helicopters have been shelved due to a tight national budget, with the country planning to revisit the tender around 2011 if the global financial crisis and economic conditions improve.

"We need to delay it...because of the financial crisis. We need to have money," says prime minister and defence minister Abdullah Ahmad Badawi. "At the moment, we have decided not to purchase the helicopters."

Kuala Lumpur selected the EC725 in early October to replace its Sikorsky S-61 "Nuri" fleet, and sent a letter of intent to Eurocopter to begin negotiations. This has now been cancelled, with Badawi saying the country could revive the tender or order fewer helicopters before 2011 if the situation improves.

ec 725 
 © Eurocopter

"Once the financial situation improves, we will buy. We need new helicopters to replace our ageing fleet," he says. "Until then, we must ensure that we service these [existing] aircraft as best we can." The government had hoped to receive replacements by early 2010, but industry sources now expect the helicopters to arrive only around 2013.

Badawi says that Eurocopter will not be paid any compensation, and reiterates that the move was not linked to a controversy that the selection had sparked. Opposition politicians and Eurocopter's competitors have claimed that the EADS subsidiary was unfairly favoured in the tender, as the air force and defence ministry did not issue a shortlist or conduct proper flight trials. Malaysia's Public Accounts Committee will continue with an investigation into the failed tender, but Badawi remains confident that the selection was legitimate.

Eurocopter's Malaysia office says it is waiting for details from the government. The company has been gradually growing its presence in the country, and has a helicopter maintenance facility at Subang airport near Kuala Lumpur.

Malaysia requires up to 48 helicopters to replace the Nuris, the first of which were inducted in 1968, while its army has a separate utility helicopter requirement.