Fewer ships, bigger bill

Kua Kia Soong

Malaysia is not merely buying ships late. We are buying fewer ships for more money – and may receive the first one before it is actually capable of fighting.

That is the stark reality exposed by the latest auditor general’s report.

The littoral combat ships (LCS) project was 7.6% behind schedule, as of 25 June. The first vessel, LCS 1, was itself 13.9% behind.

Its physical handover, already postponed from August to December 2026, may now be pushed to April 2027.

But even that is not the worst of it. The government may eventually receive LCS 1 without the full combat capability that makes it a warship in the first place.

So what exactly are we celebrating when the ship is ‘handed over’? Six became five – and RM9.1bn became RM11.2bn.

Let us start with the basic arithmetic. The original LCS contract was for six ships at RM9.1bn. After restructuring, Malaysia is getting five ships at RM11.2bn.

That is fewer ships for more money. By June 2026, RM8.6bn – 76.2% of the revised contract value – had already been paid.

An accountability crisis

For an ordinary household, paying more and receiving less would be called a disastrous bargain. For a government procurement programme involving billions of ringgit of public money, it should be called something more serious: an accountability crisis.

The government cannot keep telling taxpayers that the project is ‘progressing’ merely because more money has been spent and more steel has been assembled.

The question is not how much has been spent. The question is what Malaysia has actually got for the money? A warship without its complete or planned weapons?

The most surreal possibility is that Malaysia could take delivery of LCS 1 while its planned essential weapons and support systems could still be unresolved.

Five critical complementary contracts remain unfinalised. The most serious problem concerns the planned surface-to-surface missile system.

Problems with the export approval for the original missile system mean Malaysia may have to buy an alternative. The audit estimates this could involve three years of negotiations, followed by six years for production and delivery.

In other words, the navy could receive its first LCS while waiting years for one of its principal weapons.

This is where bureaucratic language becomes almost comical. A ship can be physically delivered. A contract can be declared substantially completed. A minister can stand beside it for the obligatory photograph.

But what if the ship cannot fully perform its intended combat mission? People are entitled to ask whether this is the warship we paid for. Or is it merely one of the costliest floating works in progress in the country’s history?

A major procurement timeline shift

Here the LCS saga becomes more than another story about delays. For years, people have been told that the project was being rescued, restructured and put back on track.

Each time the deadline moves, we are given another explanation. Each time the cost rises, there is another justification. Each time another problem emerges, we are told that the project must continue because too much money has already been spent.

Now we appear to be approaching a new definition of success. Success no longer means delivering a planned, fully operational combat vessel. It means handing over the vessel.

The distinction is crucial. A physical handover is an administrative event. Full combat readiness is a military capability. They are not the same thing.

According to the auditor general’s findings, full operational capability could stretch all the way to 2035. That is not a delay. That is a major procurement timeline shift.

Who is accountable?

The LCS saga has now gone on for so long that the public may simply become numb to each new announcement.

In 2011 the Najib Razak administration approved the project. Zahid Hamidi was defence minister at the time. A letter of award for the RM9.1bn project went to Boustead Naval Shipyard (BNS) on 16 December 2011.

The contract for the construction of the first six ships was signed a few years later, on 17 July 2014.

The project was restructured down to five ships under the Anwar Ibrahim administration in early 2023. Minister of Finance Incorporated (MOF Inc) took over BNS, and the company was later restructured and renamed Lunas.

Someone must ultimately answer for the decisions that produced this extraordinary situation. Who approved the original procurement arrangements? Who was responsible for ensuring that the ships, weapons systems, logistics and training requirements were properly integrated?

Why were essential complementary contracts left unresolved? Why did the original six-ship programme become a five-ship programme at a substantially higher cost? Why should taxpayers accept a vessel before it possesses the full capability for which it was ordered?

And, most importantly, who will be held responsible if Malaysia finally receives five ships costing RM11.2bn – only to discover the navy still lacks the fully operational fleet it was promised?

Parliament cannot simply rubber-stamp the next cheque. The LCS project cannot be treated as a routine procurement matter buried somewhere in the Ministry of Defence’s accounts. It is a test of parliamentary oversight.

The government should table a complete accounting of the project’s original and revised costs. This should cover all variations and supplementary contracts, payments made, penalties imposed or waived, outstanding liabilities and the precise timetable for achieving full operational capability.

Parliament should also insist on one deceptively simple distinction: when will Malaysia receive the ships, and when will it receive the full combat capability it paid for? Those are two different dates. The public should not be asked to confuse them.

The auditor general has given us the numbers. Now Parliament must demand the accountability.

After all these years, taxpayers deserve to know when the story finally ends – and when the navy finally gets the fully equipped ships it was promised.

Dr Kua Kia Soong, a former MP, is the former adviser to human rights group Suaram.

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