(DEFENSE SECURITY ASIA)-Korean Aerospace Industries (KAI) has no problem meeting the requirements set by the Malaysian government which requires payment for the purchase of 18 Fighter Lead-In Aircraft/Light Combat Aircraft (FLIT/LCA) made using oil palm or its other products.
"Korea Aerospace Industries (KAI) has no problem meeting the conditions set by the government," Kemalak Systems Sdn Bhd Chief Financial Officer Major (B) Iswandi Mohd Sharif told Defense Security Asia.
Kemalak Systems is a local partner for Korea Aerospace Industries.
The South Korean aerospace and defense company featured the FA-50 Block 20 aircraft in the Ministry of Defense's tender competition for the FLIT/LCA aircraft.
He said, payment is not necessarily in the form of palm oil (crude palm oil) simply because there are 11 elements of the final product of palm oil including oleo-chemicals, biodiesel and others that can be considered as a form of "counter-trade" payment.
He said KAI and Kemalak Systems had also held discussions with the Malaysia Palm Oil Board (MPOB).
The government has set a condition that the payment for 18 FLIT/LCA aircraft for the Royal Malaysian Air Force (RMAF) is done up to 50 percent in the form of palm oil products produced from the commodity.
Malaysia is the second largest producer of palm oil in the world after Indonesia.
The procurement of 18 FLIT/LCA aircraft for the RMAF is expected to cost RM4 billion and with that condition, at least RM2 billion in payment for the fighter aircraft will be done through barter trade (reciprocal trade) of its commodities and commodities.
Confirmation from a local partner of the South Korean company about their readiness to accept up to 50 per cent of the payment in the form of palm oil and the product to some extent answered some questions about the counter-trade issue.
Earlier, there were rumors that some companies participating in the FLIT/LCA tender, especially from Western countries, were not very fond of the terms of payment for the purchase of aircraft using palm oil or other commodities.
The companies involved are said to opt for payment in cash.
However, for companies from India, Pakistan, China or Russia that participated in the tender, payment using palm oil and its products did not pose a problem because the countries involved are indeed oil palm consumer countries.
Recently, the Commander of the Armed Forces, General Tan Sri Affendi Buang, said that a total of eight Original Equipment Manufacturer (OEM) companies had responded to the Request For Information to the RMAF.
"Among the fighter aircraft that entered the tender include Korea Aerospace Industries (KAI) FA-50, JF-17 from Pakistan Aeronautical Complex/Chengdu Aircraft Industry Group, Hongdu L-15B, HAL Tejas, Yakovlev Yak-130, Leonardo M346, Saab Gripen and Boeing T-7 Red Hawk. ”
