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KL Signs deal to buy 3 French Submarines (06 Jun 2002)

KUALA LUMPUR - Malaysia yesterday sealed a 1.035-billion-euro (S$1.74-billion) deal to buy three French submarines to establish its first fleet of subs but dismissed fears of an arms race.

Its maiden deal with European shipbuilders DCN International and Izar involved two new Scorpene-class submarines and an overhauled ex-French navy submarine, the Agosta 70, for initial training.

'The submarines will significantly expand Malaysia's naval capabilities and usher the navy into a new era of development and progress.

The Scorpene SSK was selected from several other bids because of its high-technology features including an integrated combat system with torpedo launcher.

It was also designed for missions ranging from anti-submarine and anti-surface warfare to special operations and intelligence gathering.

Datuk Seri Najib said the submarine deal, which comes two months after Malaysia ordered missile systems and tanks, was not an arms build-up but to boost the navy's capacity to police the country's long and porous border.

Datuk Najib said one vessel would be delivered in three years, and the second in 2009. Payment would be staggered over six to seven years, with half of the value conducted via barter trade and offset investment arrangements.

Under the deal, he said France would buy 230-million-euro worth of Malaysian palm oil, 92 million euro of other commodities, and invest 138 million euro for training and technology transfer to local firms here.

He said 186 Malaysian officials would be trained by the French navy over the next two to four years to operate the submarines.