Malaysia MiG Deal on Track

KUALA LUMPUR -- Malaysia will sign a $615 million deal to buy 18 Russian MiG-29 fighter jets next Tuesday and about a quarter of the payment will be made with palm oil, a government official and an industry source said Wednesday. "We will sign the deal next Tuesday," Defense Minister Najib Abdul Razak told reporters after the weekly cabinet meeting. He said Deputy Prime Minister Anwar Ibrahim and Russia's First Deputy Prime Minister Oleg Soskovets would witness the signing ceremony in Kuala Lumpur. Najib declined to reveal details of the deal, Russia's first MiG sale to a country in Southeast Asia, which was first announced last June. Malaysia is also buying eight U.S.-made F/A-18 fighters and 28 British Hawk fighters as part of its air-force modernization program. Both of these are cash deals. An industry source said 20 to 25 percent of the MiG-29 purchase would be paid for with palm oil, considerably less than was suggested when the two countries began negotiations nearly a year ago. He said the first MiG-29 fighter would be delivered by April 1995. Primary Industries Minister Lim Keng Yaik said last year that up to half of the purchase would be a counter-trade deal with palm oil, which has been in high demand, with prices nearly at six-year highs. The industry source said Malaysia, the world's leading producer of palm oil, would purchase an MiG-29 simulator package from Canadian fighter simulation software firm CAE Electronics to train its pilots. "The Russians are not supplying the simulator package and so Malaysia has picked CAE to supply it," he said, adding that parts of the MiG-29s would be manufactured in Malaysia. Among the local companies said to be involved are state-owned SME, Airod, Sapura Telecommunications and Sime Michelin Aircraft Tyres. SME and Airod will manufacture certain parts and components, just as they are doing for the Hawks and F/A-18s, while Sapura is set to maintain the fighters' avionics. Sime Michelin will make the tires, the source added. Najib also announced that a U.S. company had bid for 35 A-4 Skyhawk fighters owned by the Malaysian air force and mothballed in the desert in Tucson, Arizona. "The U.S. firm bid for it through its subsidiary in Brunei," Najib said, without naming the company. He said Malaysia would have to seek approval from the U.S. Congress before disposing of the fighters.