Updated at 9:42 ET on 2018-10-24
Malaysia is going ahead with a joint ship-building venture with China even as it reviews other China-backed projects launched by the previous government.
Under a defense deal signed by former Prime Minister Najib Razak in April 2017, Malaysia is purchasing four littoral mission ships (LMS) from China at a reported cost of 300 million ringgit (U.S. $72 million) per ship.
Malaysian Defense Minister Mohamad Sabu visited a shipyard in Wuhan, China, on Tuesday to monitor construction of the first two ships which began in late July. The other ships are to be built in a joint venture with Malaysian shipbuilder Boustead Naval Shipyard Sdn Bhd.
Sabu said the shipbuilding phase in Malaysia would involve technology transfers between the two countries, according to a text of his speech.
“I sincerely hope that the efforts to complete the construction of the ships on time will gain its momentum until the physical handover of the ships,” he said.
The deal has survived amid project cancellations and reviews announced by the new Pakatan Harapan government after its May 9 general election win. Malaysian Prime Minister Mahathir Mohamad previously said he was issuing stop-work orders for China-backed projects to deal with the country’s mounting debt.
“This doesn’t signal any change of Malaysia’s stance toward China,” Shahriman Lockman, a senior analyst at the Kuala Lumpur-based Institute of Strategic and International Studies, said of the ship deal.
The move is part of an ongoing effort to modernize the Royal Malaysian Navy that includes reducing its 15 ship classes to five. “By having fewer types of ships, it will eventually reduce the operating expenditure of the navy,” Shahriman told BenarNews.
In an interview with Defense IQ in April 2017, Royal Malaysian Navy chief Adm. Ahmad Badaruddin Kamarulzaman said Malaysia would eventually have a total of 18 LMS in its fleet.
“Littoral mission ships are relatively small, thin vessels, designed for stealthy combat near coastlines and sometimes to take on bigger enemies. With a coastline stretching from the Sulu Sea westward to the Indian Ocean, we need these four littoral platforms to be made in China. They will be delivered to RMN in 2019-2020,” he said at the time.
After his Pakatan Harapan alliance defeated former Prime Minister Najib Razak’s Barisan Nasional coalition, Mahathir said his government had inherited a 1 trillion ringgit ($240 billion) debt necessitating “cancelation” of the East Coast Rail Link (ECRL) project, among others.
“With that debt, if we are not careful we can become bankrupt,” he said in a video interview at the time. “This is the work of Najib.”
However, four days later, national news agency Bernama reported Mahathir said the government was seeking to renegotiate the terms of the deal.
“We have to bear in mind that the renegotiation of major projects like the ECRL was due to apparent irregularities and high costs,” Shahriman said, adding the ship deal represents a savings.
“If anything, the project appears to be ahead of schedule while delivering a relatively affordable alternative to anything we can get from European producers of combat ships,” he said.
A Defense Ministry spokesman contacted by BenarNews said he had no information about the cost of the LMS deal.
In August, Asia Times quoted a senior fellow at Malaysia research institute REFSA saying the project would cost the government 300 million ringgit ($72 million) per ship.
Hamzah Ahmad, an analyst at the National Defense University of Malaysia, said the nation’s demand for the ships is based on current needs.
“The LMS is a more versatile and faster combat patrol boat. It’s much more agile and maneuverable than the other types of combat patrol vessels,” he told BenarNews.
“Almost all countries have or are acquiring the LMS and in our region, Singapore already has a few. Strategically speaking, the LMS will be a welcomed addition to the Malaysian navy’s fleet.”
Malaysia and its neighbors have been grappling with piracy and kidnapping along their coasts along with a flow of foreign militants across the Sulu Sea to the southern Philippines.
An earlier version of this story incorrectly stated the reported price of the deal as 300 million ringgit ($72 million) total.