Three Memorandums of Understanding (MoUs) were signed between South African and Malaysian companies at the Malaysian High Commission in Pretoria last week. These MoUs are part of the indirect offsets programme South Africa is providing in return for Malaysia’s order for armoured vehicle turrets from Denel Land Systems (DLS). The three MoUs advance a programme of about eight offset projects that have been identified. An MoU for one of these has already been signed and about five more MoUs are expected. It is hoped that, altogether, these projects will, in due course, create business opportunities worth as much as R3-billion.

“The objective of the [offset] programme is to foster strategic international partnerships,” explained Malaysia’s Technology Depository Agency (TDA) Director Zailani Safari. “We have to look at it as a platform for local industry development.” Regarding defence contracts, the TDA, which falls under the Prime Minister’s office, is responsible for handling indirect offsets. The TDA is “operationalised” by the Malaysian Industry-Government Group for High Technology, which also falls under the Prime Minister’s office. (Direct offsets – which are directly connected to the weapons system being acquired – are the responsibility of the Ministry of Defence.)

Indirect offsets can cover a wide range of activities. One of the MoUs signed last week was between South Africa’s Embryo Plus and Malaysia’s ETD Makmur, and is about cooperation in animal husbandry. He noted that this MoU was directed at improving food security. “It is something very beneficial to Malaysia.” Embryo Plus specialises in livestock breeding technology, such as artificial insemination, in vitro fertilisation and embryo transfer. ETD Makmur is diversifying into the food industry, including livestock (it started as a telecommunications infrastructure company). The MoU will see the South African business transfer expertise and technology to the Malaysian enterprise.

Another MoU was between Intsimbi of South Africa and Miyazu of Malaysia and covered cooperation in the area of tools, dies and moulds. Intsimbi is a not-for-profit company focused on rejuvenating and developing the South African tool, die and mould manufacturing industry. It is a partnership between the South African Department of Trade and Industry and the Tool Making association of South Africa. Miyazu designs, engineers, manufactures and supplies automotive dies, mould and jigs to major automotive companies around the world. In terms of the MoU, Miyazu will transfer technology to Intsimbi and, in return, will be able to expand its business in South Africa.

The third MoU is between Denel Aerostructures and Malaysian company Strand Aerospace and is concerned with human capital development in Malaysia and the joint development of new market opportunities in Africa and Asia. It also creates opportunities for technology transfer. “This agreement strengthens our relationship with Strand Aerospace,” stated Denel Group COO Jan Wessels.

The offset programme is designated as the “8 × 8 Offset Programme” by Malaysia as it concerns the acquisition by the Malaysian Army of 8 × 8 armoured infantry fighting vehicles. While the vehicles themselves are of Turkish design and also contain French systems, their turrets and weapons are being supplied by DLS. All three main suppliers (Turkish, French and South African) have to supply offsets. Under Malaysian law, offsets are compulsory for all government foreign acquisitions worth more than 50-million ringgit (about R165-million).

The other identified offsets include projects in the automotive industry, laser additive manufacturing, unmanned air vehicles and cooperation in human capital development. “We would like to set the offset programme as a platform that would benefit both countries,” affirmed Safari.