KUALA LUMPUR – Malaysia’s locally built Navy ships are expected to be completed within the next year or two, said Defence Minister Hishammuddin Hussein on Monday (Aug 8), as he responded to growing clamour over the scandal-tainted project.

“I said at least within a year or two, I hope we will be able to complete the first ship,” he said in Parliament in response to a supplementary question from a senator.

None of the six vessels ordered by Navy have been delivered by local contractor Boustead Naval Shipyard, which was awarded the project in 2013 without an open tender being called.

The government has paid out RM6 billion (S$1.86 billion) in the RM9 billion project to build the six Littoral Combat Ships (LCS), a parliamentary committee said last week.

Five of the vessels should have been delivered by this month, the bipartisan Public Accounts Committee (PAC), a body that reports to the Malaysian Parliament, said last Thursday (Aug 4).

The LCS are relatively-small ships generally designed for operations near the shore.

The contract traces back all the way to 2011, with the contract taking effect on Oct 3, 2013, Malaysian media has reported.

Boustead Naval Shipyard is a subsidiary of Boustead Holdings, whose biggest shareholder is the armed forces fund, Lembaga Tabung Angkatan Tentera.

Anti-corruption watchdog Transparency International Malaysia (TI-M) on Monday criticised how the project has been handled.

It compared the LCS scandal to the 1MDB scandal, where US$4.5 billion (S$6.2 billion) was allegedly siphoned out, and said Malaysia is increasingly becoming known for its bad governance resulting in the loss of billions of ringgit of public funds.

“With numerous governance and audit structures within the public sector which are responsible to prevent corruption and improve good governance practices in place, how could the LCS project which started in 2013 be allowed to become a colossal procurement and governance failure for so long?” TI-M president Muhammad Mohan said in a statement, as quoted by Malay Mail online news. “How could they collectively have missed all the red flags?”

The bipartisan PAC last Thursday issued a statement on its findings on the LCS deal. It said though not a single ship had been completed, the government had already paid Boustead Naval Shipyard RM6 billion, local media said.

The first LCS was supposed to be delivered in 2019, but is only 44 per cent completed, according to the PAC report.

The PAC also said the Navy’s view on specifications for the six vessels was ignored by the Defence Ministry and Boustead, and another design was picked.