Competition for Malaysian helicopter contract raises some important issues

Murray Hunter

Competition for Malaysian helicopter contract raises some important issues

Informal networking is a key in government contracts

Aug 17, 2024




A Royal Malaysian Air Force EC725—now known as the H225M. Credit: Chen Chuanren/Aviation Week


Competition for the helicopter market in Malaysia is ramping up with the arrival of a local newcomer backed by Airbus, which is upsetting the exclusive monopoly previously enjoyed by Leonardo's local partner, Weststar.

The Italian defence group will have to be patient before celebrating its new helicopter contract with the Malaysian government, which has been forced to delay the announcement of the RM 19.7 billion contract because of various obstacles.

These obstacles bring up two fundamental issues.

Putting Royal assets and business interests in ‘Royal Estates”

Where companies have royal equity holders, these companies’ management and shareholdings should be kept at arms length from the rulers. Rulers should not act for either directly or informally for these business interests.

In Thailand until 2018, business assets of the Royal family were kept under the Crown Property Bureau, which operated and managed assets, making all business decisions. This prevented the ruler from interfering in business and putting any pressure on tender decisions.

The upcoming helicopter business deal shows the need for such a system in Malaysia.

Civil servants declaring any conflict of interests in deals before the government and standing aside from the procurement process

With the recent appointment of Shamsul Azri Abu Bakar as the Chief Secretary of the federal government, civil servants must be forced to declare any conflict of interests with contracts under their purview.

The above helicopter contract will be Shamsul’s first test as chief secretary of the government.

This will indicate just how serious the new chief secretary and government is on preventing corruption and developing more transparency in government procurement processes.

Inside the government and civil service circles, informal networking is the key to getting things done. These informal networks extend to high corporate circles. Thus, the use of these informal networks to garner favors is endemic. This is almost impossible to stamp out, particularly if ethics and principle have been thrown out the window.