LCS scandal: fewer ships, more money, less fire power

 The auditor-general has given us the numbers – now Parliament must demand accountability.

From 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 extraordinary reality exposed by the latest auditor-general’s report.

The littoral combat ship (LCS) project is now 7.55% behind schedule, with the first vessel, LCS 1, itself 13.88% behind schedule. Its physical handover, already postponed from August to December 2026, may now be pushed to April 2027.

But 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 RM9.13 billion became RM11.23 billion.

Let us start with the basic arithmetic. The original LCS contract was for six ships at RM9.13 billion. After restructuring, Malaysia is getting five ships at RM11.23 billion. That is fewer ships for more money. And by June 2026, RM8.56 billion – 76.22% 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 has Malaysia actually got for the money? A warship without weapons? The most surreal possibility is that Malaysia could take delivery of LCS 1 while essential weapons and support systems are still unresolved.

Five critical complementary contracts remain unfinalised. The most serious problem concerns the surface-to-surface missile system. Because of problems involving the export approval for the original missile system, Malaysia faces the prospect of having to procure an alternative. The audit estimates that 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 if the ship cannot perform its intended combat mission, Malaysians are entitled to ask: is this really the warship we paid for – or merely the most expensive floating work-in-progress in Malaysian history?

A major procurement timeline shift

This is where the LCS saga becomes more than another story about delays. For years, Malaysians have been told that the project is 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 fully operational combat vessel. It means handing over the vessel. The distinction is crucial. A physical handover is an administrative event. Combat readiness is a military capability. They are not the same thing. And 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 there is a danger Malaysians will simply become numb to each new announcement. In 2011, the Najib Razak administration approved the project and Ahmad Zahid Hamidi was the defence minister.

A letter of award for the RM9.13 billion project was issued to Boustead Naval Shipyard (BNS) on Dec 16, 2011. The official formal contract for the construction of the initial six ships was signed a few years later, on July 17, 2014. The restructuring of the LCS project down to five ships was finalised under the Anwar Ibrahim administration in early 2023. The finance ministry officially stepped in and took over BNS, and the company was subsequently 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 RM11.23 billion, only to discover that the navy still does not have the fully operational fleet it was promised?

Parliament cannot simply rubber-stamp the next cheque. This is precisely why the LCS project cannot be treated as a routine procurement matter buried somewhere in the defence ministry’s accounts. It is a test of parliamentary oversight.

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

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

The auditor-general has given us the numbers. Now Parliament must demand the accountability. And after all these years, the Malaysian taxpayer deserves to know when the story finally ends – and when the navy finally gets the ships it was promised. - FMT

Kua Kia Soong is a former MP and former Suaram director.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.