Ananda
The Bunker Group
- Thread Starter Thread Starter
- #101
Sandhi like I said on other thread, at present (2010) we only have USD 4.5 bio military budgets which represent less than 0.7% of GDP compared to this year GDP (which World Bank analyst agree will be in the amount of USD 700 bio). Of that only USD 1.5 bio that's available for procurements of new asset or upgrading existing asset.From Where will we get such amount of money?
We even have not enough money for the Project 636 subs, more CN235s or even for the required budget for the maintenance of all weaponsystems.
Worldbank, IMF?
The money for the Kilo is there, please remembered that the financing of the submarines project has been set asside on the budget period of 2005-2009 in the amount of USD 700 mio. This budget been carry over to the period 2010-2014 not because the money is not there, but because the Mindef, The Ministry of Economics, Ministry of State Enterprises and the Navy still can't decide which Submarines we would buy.
Remembered the contradictive argument between the Mindef which in one side say that the Submarines Technology still far from PAL Capabilities and PT Pal (with backup of Ministry of Economics and Ministry of State Enterprises) who said that they can build Submarines and only need Foreign Shipyard/Design House to be their partnet in Technology.
On the credit export, large chunck of Russian Credit Export also has not been used, due to this arguments on Submarines. It's the Navy that said that they want Kilo's. While from other ministry point of view is whoever can provide technology to build the submarines locally with PAL would be the winner.
That's why the Light Frigates programme that seems wil be go ahead soon, since PAL seems near the completion with Foreign Shipyads/Design House which will provide the basis for Local Light frigates.
This is huge amount of money and need a lot of political support from administrations and parlements, which seems this days the support is to build as much as possible locally.
Now for the fighters this's more clear cut. We simply do not have capacities (within DI/IAe) and technology to build Fighters locally for at least another decade or so. Thus Fighters was more clear cut to be sources from outside.
That's why now seems the Russian Credit Export will be given much of that to the Air Forces (who already stated that they want more batch of flankers than current 10, at least another 6, and Medium Range SAM like SA 300).
Personally I don't think we'll go with Kilo. The Navy will not like that, but the bean counters in other ministry will be more inclined to back up South Korean or the German in which both of them already stated their willingness to help PAL build Submarines manufacturing facilities if the prices right.
Now the administrations said that the budget will be gradually increase until reach 1.5% of GDP by 2014. Next year it's already commited USD 7.3 bio for military budgets in shich USD 3 bio already stated for procurements new assets and upgarding existing assets. That's double than this year. If 1.5% going to be reached by 2014, in which many economist local and world bank predicts the GDP will be around USD 1.0 Trillion, than we're talking USD 15 bio, in which half of that will be available for procurements.
However money asside is also not the only problem. Currently our budget practises is single year budget usage. In short those budgets has to be used only in the year budget. Lest said the air force have procurement allocations of USD 400 mio. They also know next year they will get another USD 400 mio at minimum. They're interested in another batch of Flankers amounted USD 300 mio. However they already used USD 200 mio for another procurement, thus only left USD 200 mio.
Under single year budget policy, they can't make contract for that batch of Flankers, even they know by using part of next year budget they can afford to made that contract. However if we using multi year procurements budgets (like many nations already use like US did), the they can make that contract and will be paid in batches wich run multiple years.
That's why from 2005 - 2009, the budgets that being used was in average of 70%. So by doing multiple year budget (in which now being heavely discussed by the respecting ministry) in theory we can:
1. Made large at front contract for procurements which will be paid in batches,
2. This also can reduce the costs of procurements than doing each single contrect every year. US Navy already doing this when contracting their new Super Hornet which according to this month AirForce magazines already save them USD 500 mio.
3. Also by using multiple years budget, you can also tap the money from local state banks wich now still reluctant to financed military procurements due to one big part of no multiple year contract. Banks and Manufactures love multiple year budgets and contracts since it guarantee the availability of the fund for long term projects.
In shot having money thus not guarantee that you can used them. I suspect Mindef now more boldly assesing new asset since the administrations now since more inclined to provide more money, and also since the respective ministry now seems on the verge on agreeing multiple years budget procurement contract.