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Volume 2010
Main headlines from this issue
Canada offers obligors limited credit banking
Industry Canada is to permit a limited form of banking of Industrial and Regional Benefit (IRB) transactions in advance of an upcoming procurement and in the event of overachievement of IRB credits. The policy is not straightforward.
Offset mix-up puts Siemens out of Israel Railways bid
Siemens has been eliminated from a major tender of Israel Railways because it misunderstood the terms of reference and failed to present a detailed industrial cooperation implementation plan.
Thai chickens return as corruption indictments are dropped
Thailand’s Attorney-General has defended his decision not to indict three former politicians accused of corruption in connection with the purchase of fire trucks and boats at a cost of 6.8bn baht ($217m).
Bulgaria signs off second offset contract
Bulgaria has successfully completed the indirect offset obligations for the Textron commitment. Textron had a 110 percent commitment, 70 percent of which was indirect and 30 percent direct, contracted under the previous regulations when Bulgaria used multipliers.
Chile and Colombia to participate in production of Embraer’s transport aircraft
Chile will buy six Embraer KC-390 military transport aircraft and will join Brazil in the planes’ development. Chile anticipates that Chilean industry will take part in the production of a major component.
Main headlines from this issue
Peru publishes offset guidelines – with a flexible approach to the basics
Peru has launched an official offset policy. The 23-page ‘directive,’ currently available only in Spanish, requires offsets for defence procurements and services exceeding $7m in value.
Pressure builds on India’s MoD as Air Chief Marshal and international defence associations protest…
...about offset policy and agencies. India’s Air Chief Marshal and Chairman of the Chiefs of Staff Committee has reportedly appealed to Defence Minister A.K. Antony to ensure that the Defence Offset Facilitation Agency (DOFA) will become fit for purpose. A coordinated letter on behalf of international aerospace trade associations is ready to be sent to the MoD expressing concerns about the difficulties in complying with India’s offset regulations.
Israel: Pfizer signs to industrial cooperation agreement as mandatory healthcare requirement comes into play
International pharmaceutical companies and manufacturers of medical equipment are now required to enter into industrial cooperation agreements......
China denies demanding “technology for market access”
A senior Chinese executive has denied claims that China forces foreign companies to transfer technologies when they win contracts for work on the country's high-speed rail network and refuted claims that China had pressed foreign companies to transfer their technologies in return for market access.
North Korea forced to barter as sanctions cut off money inflows
North Korea is asking for barters or cash transactions as it exports minerals, resulting in deals collapsing in the final stage of negotiations.
Main headlines from this issue
Kuwait’s NOC receives new board of directors, new focus
A new Board of Directors has been appointed to run Kuwait’s National Offset Company (NOC).........His appointment is bringing a new focus to the NOC’s offset policies, particularly with regard to technology transfer.
Development of Malaysian ‘regional hub’ to be funded by existing and future offset obligations
The Malaysian government has appointed Blenheim Capital Partners in partnership with Masterplan Consulting Sdn. Bhd to support and promote a Malaysian Defence, Science, and Technology Park (MDSTP) through ‘innovative financial solutions’ and offsets.
President Sarkozy says warship deal is certain – but Admiral Vysotsky says it is not
France will build at least two advanced warships for the Russian navy, President Nicolas Sarkozy announced. Admiral Vladimir Vysotsky said: “We do not need the ship but we do need its possibilities”.
Pressure mounts on Canadian government – “more regional benefits if there was competition”
Hostility to Canada’s JSF purchase is gathering pace. The Industrial and Regional Benefits (IRB) so far accruing to the programme are described as meagre compared to those achievable through a competitive process.
Howls of anguish as European MPs condemn Greece and Portugal over “market-distorting” acquisitions
Members of the European Parliament (MEPs) and defence experts are calling on the EU Commission to go after “market-distorting, corrupt side-deals” to major defence contracts between member states. They are citing German submarine sales to Portugal and Greece as examples of malpractice.
Main headlines from this issue
German MOD regards offset as a contradiction to its principle economic policy of maintaining a market economy
Official Position:
“German MOD regards offset as a contradiction to its principle economic policy of maintaining a market economy”
Actual Practice:
Germany demands offset from German subsidiary in Switzerland
Jordan looks to the gulf for an offset policy
Jordan is making local production a condition of defence procurement “as much as possible.” The Kingdom might waive the obligation however if...
Airbus puts the squeeze on South Africa
Airbus Military has threatened to pull out of an industrial partnership that would be implemented should the company win an order to supply South Africa with eight A400M heavy-lift freight planes. The order was cancelled last November. Airbus continues to hold on to the deposit.
China accepts Malaysia’s countertrade and technology transfer terms
Malaysia’s MoD is considering the acquisition of more weapons from China under the 10th Malaysian Plan. Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi said that his ministry was now more willing to purchase arms from China.
Oil-for-loans swap provides China with a greater share of Ecuador’s oil
China and Ecuador are set to deepen their energy relations with the signing of an oil-for-loans swap that will see Ecuador receive a $1bn credit line from the China Development Bank in exchange for 36,000 barrels per day of oil.
Main headlines from this issue
Procurement famine – so Bulgaria re-writes the rule book
How do you generate offset projects during a procurement famine? Bulgaria believes it has the answer. The government has introduced pre-offsets that will be valid for seven years...
Greek MoD has eureka moment
The Greek MoD has for the first time disclosed details of its offset contracts. The ministry has signed 117 contracts since the policy was introduced in the 1980s. Of these, 32 are active and 85 offset contracts have expired.
UAE’S guidelines: a little more light
Particulars of the new UAE offset guidelines are becoming clearer, though different people seem to have different versions, depending on what they have discussed with Offset Programme Bureau (OPB) executives. What is clear is that the new hybrid input/output policy...
Australia’s Defence Priority Capabilities outlined in policy document – “offsets are costly and counterproductive”
Government papers are rarely brief, and their titles are invariably lengthy. The Australian government has outlined in great detail within a 122-page defence policy statement its Priority and Strategic Industry Capabilities.
MALAYSIA: ‘MIGHT’ sees many opportunities for reciprocal benefits in non-defence sectors
Malaysia currently has potential offsets or counter-purchase programmes from at least ten procurement projects. The purchases include the acquisition of electric railway systems and military vehicles, as well as ...
Main headlines from this issue
UAE’S new guidelines introduce a hybrid credit model – but the substance is confidential
The UAE’s Offset Programme Bureau has announced new guidelines, but has not formally released complete details. The guidelines enable defence contractors to customize their programmes by selecting credit-generating components from both input and output activities.
Romania lightens up on pre-offsets
Romania has extended the validity — and the value — of pre-offset credits. Previously, foreign contractors were able to bank pre-offset credits for projects completed in Romania for only three years. The credits are now valid for...
Another India defence study finds export benefits appear too small
With much of India’s defence equipment obsolete and in need of replacement, a Deloitte study finds the current timelines for procurement are preventing SMEs from entering the market.
Philippines: another PITC Appointment
The chaotic countertrade programme of the Philippines International Trading Corporation (PITC) is showing modest signs of movement following the appointment last month of another executive to run the countertrade division, the third such appointment in two years.
Peru selects Isdefe as offset mentor
Peru has selected Isdefe-Gerencia de Cooperación Industrial (Isdefe) to provide a training course in offsets...
Main headlines from this issue
Privately owned Indonesian company agrees $10bn countertrade deal with China’s Avic
PT Merukh Enterprises, a privately owned Indonesian company, has signed a $10bn countertrade MoU with China's state-owned Avic International Holding Corp. The agreement represents a diversification into aviation and shipping by the Indonesian company, effectively trading millions of tons of metals in exchange for airplanes and ships.
$6BN Chinese deal with Congo faces turbulence as funds go missing – hedge fund grabs deposits
It sounds like an adventure in Wonderland, but this fairytale is heading for a bad ending. A huge block of compensation deals by China with the Democratic Republic of Congo, has been hit by charges of corruption, a court case, and a barrage of criticism.
Transparency International: How to avoid going to jail for under the counter trade
The kinetic Mark Pyman, Director of Transparency International’s project to eliminate corruption in defence deals, has raised the profile of this delicate subject significantly by speaking to audiences at several offset conferences lately...
Malaysia’s national countertrade policy has been settled – details given of the new offset focus
Dr. Kogila Balakrishnan, Undersecretary at Malaysia’s Defence Industry Division of the MoD, said the national offsets policy which the country has been struggling with for the past two years has now been finalised.
Korean offsets: KOTRA spells out FDI requirement
Ahn Sang-Keun, who is in charge of KOTRA’a Investment Promotion Department, told conference delegates that KOTRA will participate in offset negotiations whenever FDI is required.
Main headlines from this issue
Australia: Industry Policy Statement
Our article entitled ‘Australia and the Accidental Global Supply Chain’ attracted an unusual amount of interest. Greg Combet, Australia’s Minister for Defence Materiel and Science, was particularly concerned about our statement that Australia’s new defence procurement battle lines have been re-drawn.
Greek penalty crisis improving, but when will words become deeds?
The Greek offset and industrial participation statute is a fearsome warrior with a troubled past. Addressing its future, Thanasis Potsis, an executive with the European Finance Associates (EFA) Group, told conference delegates ....
Blenheim: Risk mitigation and’Offset Generation II’ – The revolution has started
Grant Rogan, founder of the Blenheim Capital Group, injected a bolt of energy and optimism into proceedings with a prediction that four countries within the Gulf Cooperation region will procure some $123bn of military equipment within the next five years.
Kuwait eases formalities in preparation for key procurements
Kuwait is moving to the next phase of its offset programme with plans for a bureaucratic meltdown and a blitz of new legislation.
Spain’s low threshold generates an offset blizzard
Isdefe-Gerencia de Cooperación Industrial (Isdefe), which administers the offset policy on behalf of Spain’s General Directorate of Armament and Material (DGAM), approved more than 14,600 offset transactions between ....
Main headlines from this issue
European Commission engages with Offset…but dare not speak its name
The most conspicuous feature of the new European Directive on Defence and Security is what it lacks: there is no explicit mention of offsets. Yet, in an extraordinary turn of events the European Commission brought the issue sharply into focus one week before the GICC conference when it offered a hellfire sermon on the theme that all offsets are illegal.
European Directive gives Hungary A Dilemma
Dr. Ábel Garamhegyi, Hungary’s Special Envoy of the Prime Minister, expressed concern at the European Commission’s interpretation of offsets as an illegal activity. He made the telling inference that a question of legality is supposed to be steady. An interpretation is not supposed to change day by day.
EDA to publish study on use of abatements
Arturo Alfonso-Meiriño, the European Defence Agency’s (EDA) Director, Defence Industry and Market Directorate, disclosed that the agency has conducted an in-house study on the use of abatements and swaps.
Portugal adapts policy after scandals capture headlines – ‘Evolving Multipliers’ Introduced
Ambassador Pedro Catarino declared that the Portuguese Offset Commission, of which he is President, is now prepared to take a more interventionist and proactive approach in the construction of offset programmes.
Malaysia signs a convoy of agreements, but no contracts until the benefits are agreed
Eight contracts, five MoUs, three Letters of Acceptance (LOA), and four Letters of Intent (LOI) were signed...
Main headlines from this issue
Hello DESO, Goodbye EDA – Dramatic post-election shake-up if Conservatives win UK General Election
In an email to CTO ahead of the May 6 general election, Gerald Howarth, the UK?s Shadow (opposition) Defence Minister, said that a Conservative government would include offset strategy in a major reform of the way the country provides defence capability......
Bulgaria to introduce new guidelines pre-offset credit banking allowed
Bulgaria has decided to allow pre-offset activity, introduce credit banking, scrap all multipliers, and to cap its offset requirements at 100 percent of contract value.
Israeli / Turkish industrial cooperation extends to Colombia
Israel and Turkey are together promoting third-country exports of refurbished M60A1 main battle tanks despite political differences that have threatened the strategic ties between the countries.
Russia secures foothold in Latin America
High level meetings have taken place between Russian government officials and their counterparts from several Latin American countries that will result in compensation (buy-back) structures and other forms of reciprocity.
India: Senior IAF officer calls for national aerospace technology poicy
Indigenisation is not happening fast enough. ACM Barbora believes that the aviation sector is a vital part of India?s economic growth and noted that: ?While China produced an entire Airbus, some of our state-run firms like HAL supply only doors or undercarriage for passenger jets\.
"Main headlines from this issue
South Africa’s $114bn Industrialisation Programme: 30 percent offset target as NIPP and CSDP merge
The results of South Africa’s policy action plan, launched in February, are starting to become clear but questions still remain regarding ....... Contractors may face a bare-knuckle fight to comply under a complicated policy that is forever adding further features.
Australia and the accidental global supply chain
Australia’s new defence procurement battle lines have apparently been re-drawn. Minister Greg Combet said that the Global Supply Chain, or GSC programme, was an initiative that did not form part of the practical initiatives identified to enable Australia’s defence industry to be competitive.
India will criminalise telecom vendors failing to transfer technology
India’s Department of Telecommunications has declared mandatory the transfer of technology from equipment vendors to Indian manufacturers selling equipment to any operator.
Canada’s space programme attacked for absence of domestic benefits
The message was glum. Canada is moving ahead with a C$27m ($26.7m) space programme that industry representatives say provides almost no direct benefit for domestic firms.
Events Diary – Complete Details in This Issue
Events Diary – Complete Details in This Issue...
Main headlines from this issue
Taiwan insists “F-16s must have industrial cooperation”
Taiwan's defence ministry has denied a report claiming that the administration of President Ma Ying-jeou has abandoned a project to assemble 66 F-16s in Taiwan. The ministry said that the U.S. Government has already included in its pricing letter an industrial co-operation programme related to the purchase of C/D versions of the fighter jets.
Canada still adjusting its policy
Since introducing its revised Industrial and Regional Benefits (IRB) policy last October, Industry Canada has been busy applying a steady drip of important new amendments. The changes affect credit banking, direct offsets, multipliers, and more...
Slovenia: Review of a policy in decay
Dusan Bevc, Head of Business Network International’s Industrial Cooperation Group, suppressed nothing as he lay before his audience a litany of shortcomings in his country’s offset process. Slovenia’s policy might be on the way to comfortable irrelevance.
Positive signs following Greek MOD discussions on penalties
A Greek daily newspaper reports that following an internal Defence Ministry summit chaired by Deputy Minister Panos Beglitis an approach has been found to defuse the standoff between the MoD and defence contractors with offset obligations.
Ecudor and Uruguay reach agreement on bilateral oil barter
Ecuadorian President Rafael Correa has agreed that Petroecuador will supply Uruguay with 360,000 barrels of crude. In exchange, Ancap will provide Ecuador an equal amount of gasoline. Mr. Correa described the deal as a step toward regional integration.