Boustead Heavy set to shift focus to new ships for the navy

By ALIFAH ZAINUDDIN / Graphic By TMR

Boustead Heavy Industries Corp Bhd (BHIC) will be shifting its focus from the oil and gas (O&G) industry to building new ships for the Royal Malaysian Navy (RMN).

The maritime services provider is expected to take a step back from O&G contracts after the company and its subsidiary, Boustead Naval Shipyard Sdn Bhd, secured RM6 billion worth of contracts from the navy to date, in line with the RMN’s 30-year transformation plan.

The RMN is currently undertaking efforts to reduce its fleet size from 15 classes to five classes, namely the multi-role support ship, littoral mission ship, littoral combat ship, petrol vessels and submarines.

BHIC chairman Tan Sri Lodin Wok Kamaruddin said the company wants to focus on meeting the demands of the navy and slow down on O&G contracts.

“Our hands are full at the moment. When there is a turnaround in the sector, we will probably consider it, but right now we want to fill the gap in the navy,” Lodin told reporters after the company’s AGM in Damansara yesterday.

The RMN transformation plan aims to reduce administration costs within the navy and enhance the national security level, RMN Chief Admiral Tan Sri Ahmad Kamarulzaman Ahmad said.

“The plan depends on the affordability of the government. But we believe it can cut the huge loss of revenue faced by the country from dealing with poaching and illicit trade,” he said.

On BHIC’s side, the downturn of the O&G sector, along with the recent imposition of aluminium and steel tariffs by the US, has pushed the company to remain in the negative territory over the last few years.

The contracts awarded by the RMN will be a major boost to the group’s financial earnings this year, in addition to its internal restructuring initiatives.

Lodin expects BHIC to grow at least 10% this year, if all the group’s efforts and plans follow through. Meanwhile, refit work on

KD Tunku Abdul Rahman, the RMN’s Scorpène-class submarine, is expected to complete next month.

BHIC MD Tan Sri Ahmad Ramli Mohd Nor said repair works on the RMN’s first submarine will be delivered in May, after years of delay.

Upon the fulfilment of KD Tunku Abdul Rahman, BHIC will then commence maintenance work on the navy’s second submarine, KD Tun Razak.

In 2010, Boustead DCNS Naval Corp Sdn Bhd — a joint-venture company between BHIC and French shipbuilder DCNS SA (now known as Naval Group) — was appointed to provide refit services to KD Tunku Abdul Rahman and KD Tun Razak for a total of RM1.23 billion.

Following the expiry of the contract on Nov 30, 2015, the government extended the maintenance contract for both submarines to May 2017 for RM272 million, bringing total costs to RM1.39 billion.