KUALA LUMPUR, May 19 – Malaysia is seeking more than RM1 billion in damages from a Norwegian defence company following Norway’s decision to cancel export licences for a naval strike missile (NSM) system intended for the Malaysian navy.
Defence minister Khaled Nordin said Norway’s last-minute cancellation of the export licence, despite Malaysia having paid 95% of the contract value, forced Putrajaya to issue the company a notice of demand.
According to missile manufacturer Kongsberg Defence & Aerospace, the NSM procurement contract was signed in April 2018 to equip six new littoral combat ships.
“We have made payments amounting to 95% of the total procurement value of RM634 million,” Khaled was reported as saying by Utusan Malaysia.
“Today, we have issued a notice of claim to the Norwegian company. We are claiming direct costs, which is the amount already paid of RM583 million, as well as indirect costs, bringing the total claim to more than RM1 billion,” he said at a press conference after a working visit to the naval base in Lumut, Perak.
He said the indirect costs included the removal of missile mounting systems already installed on the navy’s vessels, as well as the integration of replacement systems supplied by other vendors.
The Norwegian government revoked an export permit for the NSM ordered by Malaysia under the 2018 contract, saying that exports of its defence technology would be limited to its “allies and closest partners”.
Norway’s foreign affairs ministry also said it decided to revoke the export licence for the NSM system and its associated launcher systems due to the changing security landscape in Europe and around the world.
Khaled said Norway’s cancellation of the export licence raised questions about the reliability of international commitments in defence procurement.
He said international relations depend on trust between countries to honour agreements, contracts, and commitments.
“What happened to us is not just a defence procurement issue, but reflects an erosion of trust in international relations.
“When such commitments can be unilaterally revoked, confidence in the entire system begins to erode,” he said.
He said Malaysia hoped that Asean countries would learn from Malaysia’s experience and be more cautious in defence procurement dealings with Norway.
“We have also advised that any defence purchases, including missiles and other equipment, should no longer be made from Norway.
“In addition, the government must be more cautious in procurement dealings with other countries that could potentially take similar action against Malaysia.”
