Canceling LCS project in Lumut will signal incapability of local defence industry - Zambry

IPOH, Feb 26  - The littoral combat ship (LCS) project in Lumut, which has been postponed since December 2019,  if canceled, will give a signal that the local defence industry, including the vendors,  are incapable and would create a multiplier effect on the country’s economy, said Pangkor Assemblyman Datuk Seri Zambry Abd Kadir.

He said said this was because it would lead to a lack of involvement by local vendors in the shipbuilding value chain to create multiplying impact on the country's economy.

"There are more than 400 local vendors involved in the LCS project and most of them are Malaysian Armed Forces (ATM) veterans.

"If this project is canceled, not only will they lose their jobs, but also the local vendors involved will be burdened with costs of RM3.7 billion," he said when contacted by Bernama today.

He said the situation should not be faced by local vendors, especially when the country was still in the process of recovery from due to COVID-19.

"To lose a job at the moment will add more challenges in their daily lives and those of their family members. This is a chain reaction that must be avoided," he said.

Asked whether the defence industry, like the project in Lumut would be affected especially in terms of employment opportunities and the supply chain for such projects, he said, implementation of a project would indirectly create employment opportunities.

"If it is canceled, it will definitely cause a chain reaction to the entire ecosystem, including closing job opportunities for all the local vendors," he said.

It was previously reported that the Defence Ministry had conducted an in-depth investigation on the failure of Boustead Naval Shipyard Sdn Bhd (BNS), which is a subsidiary of Boustead Holdings Berhad, to supply six littoral combat ships, worth RM9 billion, to the Royal Malaysian Navy.

Prime Minister  Datuk Seri Ismail Sabri Yaakob, who was then Senior Defence Minister,  said the ministry had also conducted an investigation by reviewing the contract clauses on the late delivery in the acquisition of LCS.

According to him, findings of the investigation led to the issuance of the notice of Liquidated and Ascertained Damages (LAD) amounting to RM180 million in which RM80.6 million had been collected one-off  from BNS in October 2020.

According to the original plan, two of six LCS should have been delivered, but as at July 31 (2020), none had been completed.

-- BERNAMA