Malaysia adds funds to troubled littoral combat ship program

SINGAPORE — Malaysia is pumping more money into its troubled Littoral Combat Ship program, despite reductions in capabilities and scheduling delays.

The government announced the move during the Langkawi International Maritime and Aerospace Exhibition last week, signing its sixth supplementary contract with shipbuilder Boustead Naval Shipyard on May 26.

This latest contract will see Malaysia pay an additional $430 million for the ships, which are based on the Gowind-class frigate by France’s Naval Group. Malaysia will also reduce the number of ships it will receive under the revised contract from six to five, and accept an additional delay to the ships’ deliveries.

Under the new delivery schedule, Boustead Naval Shipyard will deliver the lead ship — KD Maharaja Lela — in 2026, seven years after the originally planned date. The company will deliver the final ship, KD Tok Janggut, in 2029, five years later than initially planned.

Malaysia’s Finance Ministry will take over the shipbuilder by setting up of a special-purpose vehicle to acquire Boustead Naval Shipyard from its parent company, Boustead Heavy Industries Corp.

Malaysia selected the Gowind design for its second-generation patrol vessel program in 2011, awarding a $1.96 billion contract to Boustead Heavy Industries for the six ships, with construction to take place in Lumut, Malaysia. The government subsequently renamed the effort as the Littoral Combat Ship program.

The lead ship, KD Maharaja Lela, launched in August 2017, but the program was soon plagued by construction delays and cost overruns. A parliamentary public accounts committee launched an investigation into the program, during which members visited the shipyard and interviewed a former defense minister, among other defense and company officials.

The committee revealed in August 2022 that work on the ships had completely halted by then. It also alleged that $300 million was misappropriated from the program, which led to fraud charges leveled against Boustead Heavy Industries’ former managing director, Ahmad Ramli Mohammad Nor.

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