III , , AND THE INTERNATIONAL

Singapore is a modem, ultra-clean city-state, with excellent tourist and shopping facilities. It also has the highest rate per capita of executions in the world, a large, government-regulated commercial sex industry, and is a manufacturer and exporter of that are designed to kill. The Singa­ pore government's strong preference for execution and the city-state's commercial sex industry were looked at in The Asian Insider. It's Singa­ pore's role in the international arms industry that is examined here.

No Messing Around

Four men of Pakistani descent hijacked Singapore Airlines flight SQ 117 on March 26, 1991. The flight was on its way from to Singapore, with 118 passengers from 18 countries and 9 crew members on board. l Armed with knives and canisters of explosives, the hijackers directed the flight's captain to take the plane to Sydney. But the plane did not have enough fuel for the journey, so the hijackers agreed to allow it to land at Singapore's Airport. The four claimed to be members of People's Party (PPP), Pakistan's main opposition party. Their demands included the release of various PPP leaders from prisons in Pakistan. Once at Changi, they asked that the aircraft be refueled so that it could be flown to Australia and there­ after to Iraq or Libya. The first load of fuel was delivered to the aircraft at about 3am. The hijackers agreed to release ten women and children before the next load of

138 M. Backman, Inside Knowledge © Michael Backman 2005 Singapore, Malaysia, and the International Arms Industry 139 ,----, fuel. But they changed their minds: no hostages would be released. By 6am the hijackers decided that the plane, still with insufficient fuel for Sydney, should now fly to Jakarta. Forty-five minutes later they issued a deadline: if their requests were not met within five minutes, they would start to kill the hostages. At around 6.50am, hooded commandos were given the command to storm the plane. They had been waiting beneath its rear section. They propped their ladders against the sides of the plane and opened its doors from the outside. Twenty commandos stormed in, from both ends of the aircraft. They detonated stun grenades to immobilize the hijackers, while screaming to the passengers to get down. Automatic gunfire followed. Within minutes the commandos had killed three terrorists with their precision shooting. The fourth grabbed a woman to shield himself. Another passenger grabbed the woman away, allowing a commando to open fire at close range, and the fourth hijacker was killed instantly. The storming was over in just four minutes. Each of the four hijackers was dead and not a single passenger or crew member had been harmed. The authorities had not even needed to close the airport. It was one of the cleanest, most efficient endings to a plane hijacking ever. Singapore has developed one of Asia's most advanced armed forces, as the four hijackers were to learn, if only briefly. It has also developed one of the region's most sophisticated defence industries. From where did Singapore receive the inspiration for all this? Israel, with whom Singapore has close military ties. It turned to Israel for help to create a defence force after its separation from Malaysia in 1967, when the British advised that they would be withdrawing their forces from the island. Malaysia did not recognize Israel (and still doesn't), but Singapore did immediately. And with recognition came assistance. Singapore's Armed Forces routinely participate in joint exercises with other armed forces in the region. This helps with training but also provides knowledge of regional capabilities. Not surprisingly, the Singaporean forces invariably are superior, and sometimes the gap is very wide. Singaporean soldiers who have been involved in joint exercises with the Indonesian military have told me how two or three Indonesian soldiers are "routinely" killed when it comes to exercises that use live . Accidents are common. Often Indonesian soldiers are shot dead by their colleagues. In summing up the Indonesian generals' attitude towards their troops, one former senior officer told me that "life is cheap." 140 Inside Knowledge --- ST Engineering

For many, getting to know the real Singapore can be a surprise. Few realize that Singapore is home to an armaments and munitions industry. The biggest player in the sector is a Singapore government-linked company, ST Engineering? But the sector is not simply focused on arming Singapore's military. It has become heavily export focused. Singapore's Defence Science and Technology Agency (DSTA) handles a lot of the research and development. The rationale is that there is a need for armaments and the other paraphernalia of the battlefield to be redesigned to fit the physique of the Asian soldier and also to function effi­ ciently in tropical conditions. With most weapons being designed in Europe and North America for larger bodies and cold to temperate climates, it is a marketing pitch that ought to appeal to prospective clients in Asia, Africa, and South America. ST Engineering has four main subsidiaries that are involved in military research and hardware manufacturing, although not exclusively: ST Kinetics, ST Aerospace, ST Marine, and ST Electronics. ST Kinetics is ST Engineering's key military hardware division. It was formed in 2000 by the merger of Singapore Technologies Automotives with Chartered Industries of Singapore. It has almost 3000 employees and operates from new premises in Jalan Boon Lay in Singapore. From its Singapore Technologies Automotives parentage, it still has considerable automotive interests, including its ownership of CityCab, a taxi company in Singapore with over 5000 vehicles. But it's the military hardware business that the company is now most eager to expand and promote. The shopping catalog for ST Kinetics makes illuminating reading: Field air defence mounts, advanced systems, remote stations, automatic grenade launchers, machine guns, assault , and howitzers all made in Singapore are available for order. On the munitions side there are various rounds, cartridges, and grenades. But that's not all that ST Kinetics produces. It has developed the Terrex AV81, an eight-wheeled light armored vehicle. ST Kinetics later bought a 25% stake in Ireland's Timoney Holdings, the company that designed the vehicle on its behalf. The vehicle has become part of the company's export push. ST Kinetics signed an MoU (memorandum of understanding) in 2002 with the Turkish automotive manufacturer to jointly develop an 8 x 8 vehicle based on the Terrex AV81 prototype to bid for a supply contract with the Turkish army. And it has developed infantry carriers that have been sold to the US army. But it's the SAR-21 automatic that is perhaps ST Kinetics' best- Singapore, Malaysia, and the International Arms Industry 141 known product. (SAR is short for Singapore army rifle and 21 refers to the twenty-first century.) For many years Singapore's Armed Forces had used M16Al rifles manufactured in Singapore under license. But the terms of the licensing agreement meant that exports were difficult. So that Singa­ pore might earn export dollars from its rifle production, it developed its own rifles. The first local rifles to be developed were the SAR-80 and the SAR-88. The SAR-80, for example, was then sold to South Africa. But it was the SAR-2l into which most development and energy has been expended. It was developed by ST Kinetics both for Singapore's Armed Forces and to sell overseas. Modifications allow it to be converted into a and a grenade launcher. "The SAR-2l is among the best handling and easiest rifles to use that the author has ever experienced," wrote one interviewer for lane's International Defence Review.3 Others say that since it's gas operated, it's prone to jamming. Sales have been disappointing. The market for rifles, like for most light munitions, has become commoditized. They're easy to make and replicate and conse­ quently margins are low. ST Kinetics is a regular exhibitor at international arms fairs, including the International Defence Exhibition in Abu Dhabi, Defence Systems and Equipment International in the UK, the Latin America Defentech in Brazil, and the Armor Conference in the US. In the US, its weapons are marketed and distributed by VT Systems, an ST Engineering subsidiary. In March 2001, it signed an MoU with Italy's Oto Melara to co-develop a variant of its 155mm lightweight self-propelled howitzer. It has also developed its 40mm air bursting munitions ssystem in collaboration with Switzerland's Oerlikon Contraves. And there's a development agreement with Australia's Innovonics for the installation of fleet management and vehicle monitoring systems for its Bronco all-terrain vehicles. What will the future bring? ST Kinetics is reportedly keen to move away from production of conventional weapons, munitions, and vehicles toward robotics, guided weapons, and unmanned aircraft. The desire is to move toward production of more sophisticated weaponry for which margins are higher and the potential for export earnings greater. ST Kinetics' sister company ST Aerospace is a genuinely global player in the market for upgrading and maintaining military and commercial aircraft. It provides upgrade packages to the world's air forces to "provide maximum performance and survivability" for fighter, transport, and rotary wing military aircraft. Recent clients have included the Turkish air force for which ST Aero­ space upgraded 48 F-5 fighter aircraft; the Brazilian air force, which awarded the company a similar upgrade contract; and the Singapore air 142 Inside Knowledge

force. The US navy is a long-tenn client of ST Aerospace with which it has a C-130 Hercules depot servicing contract. Upgrade programs have also been developed for various military and civilian helicopters and F-16 fighters. The company has subsidiary operations in Texas. And in 2001, it set up a joint venture with FR Aviation Group, a subsidiary of the UK-based defence manufacturer Cobham. The joint venture, Bournemouth Aviation Services (60% owned by Singapore Technologies) is based at Bournemouth International Airport in the UK.4 For its part, Cobham supplies military air­ to-air refuelling systems among other defence-related products. It won a contract to supply such a program to Malaysia in 2001. ST Marine supplies the Singapore navy with small vessels and it too is keen to win export contracts with foreign navies. Its capabilities also include ship repair and ship conversion. It has produced a range of military ship designs that incorporate advanced stealth capabilities although it's not clear that these have gone beyond the design stage. The company has subsidiaries overseas including VT Halter Marine in the US. This company has contracts with the US navy to construct logistic support vessels. It also won a US$47 million contract in April 2003 to complete the building of a car carrier vessel. 5 In 2004, it was named as a prime contractor for a poten­ tial US sale of three fast missile craft to Egypt.6 ST Electronics designs and develops software and advanced electronics solutions principally for road and rail transportation but also develops systems for defence and defence training and simulation. A subsidiary, ST Training & Simulation, offers for export state-of-the-art flight mission trainers for pilot training that include precision-combat flight operations and mission-simulation training. Also on offer are armor gunnery and tactical simulators.

Keppel and Avimo

While ST Engineering dominates weapons, mumtlOns, and military components manufacturing in Singapore, it's not the only local player. Yet another government-linked company is keen to develop an interest in the defence industry. In October 2003, Keppel Corp's US subsidiary Arnfels won a US$73 million contract from Boeing to outfit a semi-submersible drilling platfonn that would be used as a radar outpost for the US govern­ ment's missile defence system. It was expected that when finished, the platfonn would be deployed in the Pacific Ocean to be used as an early detection facility for missiles fired from North Korea.7 Singapore. Malaysia. and the International Arms Industry 143

Avimo is another Singapore company involved in the sector. It designs, manufactures, and services advanced precision optics and optical coatings, laser equipment. and the like. It won major contracts to supply systems for Apache helicopters. The British arms manufacturer Alvis controlled Avimo until around 2001. Alvis's final 17% stake in the company was sold for £25.7 million to Thales (formerly known as Thomson-CSF).8 The Kuwaiti Investment Office held a minority stake. Thales of France is one of the world's biggest weapons and military systems manufacturers. Its acquisition of Avimo means that it now has a manufacturing presence in Singapore.

The Myanmar Controversy

Singapore's military exports sometimes prove controversial, none more so than the alleged export of weapons and military know-how to Myanmar in the late 1980s. Several articles appeared in Jane s Intelligence Review in which it was claimed that 84mm rockets and other munitions made under license by Chartered Industries of Singapore (ST Kinetics' predecessor) appeared to have been shipped to Myanmar towards the end of 1988.9 This was shortly after the massacre by the military of pro-democracy protesters in the streets of Yangon (Rangoon) in September 1988. M16A1 automatic rifles, 7.62mm assault rifles, and ammunition and communications equip­ ment were sent in other shipments, according to the allegations. And then there was the separate accusation that a modular, prefabricated factory designed and built in Singapore by Chartered Industries of Singa­ pore with Israeli assistance had arrived in Myanmar in 1998 where it was set up to produce small arms or ordnance of up to 37mm. The Directorate of Defence Industries of Myanmar's Ministry of Defence had taken delivery of the facility. It was said that the factory could be assembled and operational within a matter of weeks and possibly could have been assem­ bled within an existing building such as an airport hanger. The Singapore government has always denied these allegations. Nonetheless, 104 stockholders in the TIAA-CREF, one of the biggest pension funds in the US, sent a letter to the fund in November 2002 in which they urged it to dump its shares in Singapore Technologies, on account of its arms allegedly being sold to Myanmar's military. to However, it's worth remembering that, regardless of whether Singapore­ made weapons and accessories have found their way to Myanmar, it is that is by far the biggest weapons supplier to Myanmar and the contributions of other countries are dwarfed by China's efforts. 144 Inside Knowledge

One of the most surreal experiences that I can recall having in Southeast Asia occurred while I sat on rough timber benches in an open-sided teahouse in the central Myanmar town of Thazi in the late 1990s. The teahouse was memorable for having a telephone number that comprised just two digits. The usual passing parade of rusting bicycles, clapped-out buses, and donkey­ drawn carts was interrupted by the extraordinary sight of three spaceship­ like, silver-colored armored tanks that tore past. They looked sophisticated even by NATO's standards. But here, among the dust and the poverty, they looked utterly bizarre. No doubt they comprised "aid" from China.

Singapore and Anti-personnel Landmines

Singapore has not signed the UN's 1997 Mine Ban Treaty. One reason is because it has a stockpile of landmines which it wants to keep. It also has land mine manufacturing capacity. In the past, Singapore has produced two types of antipersonnel landmines: a plastic blast mine (VS-50) and a bounding fragmentation mine (VS-69), both copies of Italian designs. l1 Prior to 1996 it even exported them. Reportedly, Iraq was one destination for Singapore-made landmines. Singapore declared a two-year limited moratorium on exports of non­ self-destruct and non-detectable antipersonnel landmines in May 1996. However, it has maintained that antipersonnel landmines are needed for "legitimate self-defence.,,12 In February 1998, Singapore expanded the moratorium to include all manner of antipersonnel landmines, not just those without self-neutralizing mechanisms, and extended the morato­ rium indefinitely. It is unclear whether Singapore still manufactures landmines. But it is clear that it maintains the ability to manufacture them. ST Kinetics remains the only company in Singapore that either manufactures land­ mines or has the ability to manufacture them.

Malaysia Follows Suit

In its efforts to compete with Singapore in almost every sector, Malaysia is keen to develop its own arms industry. That it should have its own indige­ nous arms industry is now government policy. In June 2003, it emerged that Malaysia planned to manufacture its own guided missiles and was eyeing technology from Bosnia and Brazil, two countries with which Malaysia was studying the feasibility of cooperating in manufacturing missiles. Singapore. Malaysia. and the International Arms Industry 145

Malaysia's defence procurement program appears to have ratcheted up in recent years. Britain's Alvis supplied eight supercat, all-terrain mobile platforms to Malaysia in 2001 and was expecting follow-on contracts. 13 The eight vehicles are believed to have cost Malaysia around £10 million. In 2002, Malaysia decided to buy 18 Sukhoi fighter jets from Russia in a deal believed to be worth US$900 million. It also agreed to acquire three French-made submarines for US$1.23 billion, and ordered British and Russian missile systems worth US$364 million. I4 Increasingly, deals such as these include provisions for military tech­ nology transfer to Malaysia. In 2003, Malaysia agreed to buy 48 attack PT- 91M tanks from Poland for US$368 million. Part of the deal was that local company MMC Defence would be involved in the tanks' production with the Polish manufacturer Bumar Labedy. The contract also allowed for 128 Malaysian military personnel to be trained in Poland. IS MMC Defence is part of Malaysian Mining Corporation, which is controlled by local businessman Syed Mokhtar Albukhary. The company was established in March 2001 from a company called MMC Engineering Services that in tum had been set up around 1986 to venture into armored vehicles and armaments production. The MMC Defence workshop is located at Nilai, not far from Kuala Lumpur. It is equipped to undertake the repair and refurbishment of armored vehicles and upgrading programs. Then in late 2004, Syed Mokhtar won control of a local conglomerate DRB-Hicom. I6 Defence Technologies, a subsidiary, was expected to be the major beneficiary of planned increases in Malaysian government defence spending, that would lead to, among others, a likely US$l billion joint venture between Defence Technologies and Augusta of Italy to assemble helicopters locally for the armed forces and the Malaysian coastguard. The company already had a US$290 million contract to supply armored personnel carriers to the army. Syed Mokhtar is likely to merge MMC Defence and Defence Technologies, and most probably give the new entity an export focus as well as relying on Malaysian government contracts. Another local company involved in defence-related manufacturing is Arsenal Malaysia. Controlled by Malaysian businessman Amin Shah, it trades in explosives and ammunition. In 2002, Singapore's Explomo Tech­ nical Services sought to team up with Arsenal, to jointly develop mobile demilitarization units for places such as Bosnia, Kosovo, Albania, Cambodia, and Laos. 17 Amin Shah also controls the listed PSC Industries, a naval and commercial shipbuilder. In 1998 it was awarded a multi­ billion ringgit contract to construct 27 vessels for the Malaysian navy. PSC's principal banker is the local Affin Bank, controlled by the Armed Forces Superannuation Fund, although legal proceedings commenced 146 Inside Knowledge

between the two parties in early 2005 over disputed loans. 18 The navy was yet to take possession of the first two completed craft amid complaints over quality and the government seemed intent on blocking Shah's every move if not taking over the project completely.

Sell, Sell, Sell!

Does Singapore's and Malaysia's manufacture of weapons and munitions signal a Southeast Asian arms race? No. But it does signal an increase in locally made weapons available for other countries in the region to buy. Is that a good thing? Unfortunately, this export focus is also occurring at the same time as the rise in regional fundamentalist Islamic militarism. New markets are being looked for. In late 2004, ST Engineering, for example, announced a majority-owned IT, engineering, and defence services joint venture with Kazakhstan Engineering in the Central Asian state. 19 Lenin once said: "When it comes to hang the capitalists they will compete with each other to sell us the rope at a lower price." It's an observation that Malaysia and Singapore might also heed.