LIMA 2023: Malaysia To Nationalize Littoral Combat Ship Shipbuilder
The Malaysian government will be nationalizing the shipbuilder of its Littoral Combat Ship program, following the signing of a new supplementary contract to restart work on the program. The supplementary contract, signed at the 2023 Langkawi International Maritime and Aerospace Exhibition, has increased the total cost of the five frigates to RM 11.2 billion (~2.4 billion USD).
On Saturday, Malaysian Prime Minister Anwar Ibrahim said that the Malaysian government had to nationalize Boustead Naval Shipbuilding to ensure the successful completion of the project. “We have no choice after having spent RM6 billion. We cannot just close it down, we have to take over to complete the project”, Anwar told reporters at the opening ceremony of the Kuala Lumpur International Book Fair 2023 at the Kuala Lumpur World Trade Centre.
Anwar’s comments came a day after Defence Minister Datuk Seri Mohamad Hasan announced that the Malaysian Finance Ministry had formed a special purpose vehicle to bring BNS under the ownership of Ministry of Finance, Incorporated, following the signing of the supplementary contract, the sixth supplementary contract signed for the program to date. Mohamad said that the program will have new oversight mechanisms, with a progress monitoring committee co-chaired by the secretaries-general of the Treasury and Defence Ministry tasked with reporting program progress to the cabinet and Parliament at least every three months.
A representative of Boustead Naval Shipbuilding at LIMA told Overt Defense on Saturday that work at BNS to restart the project had started “immediately” after the contract signing, although meetings and coordination with program subcontractors would be needed to restart work on the ships. The representative added that meetings between BNS and the Finance Ministry on the nationalization process were expected to start in the coming weeks.
The Littoral Combat Ship program is the largest military procurement program in Malaysian history, originally costing RM 9.13 billion (approximately $2 billion) for six frigates based on an enlarged version of Naval Group’s Gowind class corvette design. Under the program’s original timeline, five ships would have been delivered by 2023, but now lead ship KD Maharaja Lela is not expected to be commissioned before 2025. Anwar has pledged to continue investigations into allegations of corruption in the much-delayed program, but no public progress has been announced.