KUALA LUMPUR: Warning regional countries to reconsider defence procurement dealings with Norway, Malaysia is seeking RM1bil after the Scandinavian country cancelled the export licence for the Naval Strike Missile (NSM), says Datuk Seri Mohamed Khaled Nordin.
The Defence Minister said the amount is based on losses the country incurred due to the cancellation, which affected the Royal Malaysian Navy’s Littoral Combat Ship (LCS) programme as well as existing vessels KD Jebat and KD Lekiu.
A notice of claim had been submitted to Norwegian defence manufacturer Kongsberg Defence & Aerospace AS (KDA), seeking compensation for both direct and indirect losses, he said.
“The direct losses involve the amount already paid, while indirect losses include the cost of reopening existing ship installations, retraining personnel and integrating an alternative missile system into the vessels’ combat systems.
“The estimated total claim is expected to exceed RM1bil,” he said during a visit to the Lumut Naval Shipyard in Perak to inspect the progress of the LCS project.
The Norwegian Foreign Affairs Ministry was reported to have revoked certain export licences related to specific technologies, citing stricter export controls.
Mohamed Khaled said Malaysia had already paid 95% of the NSM procurement contract value, amounting to €126mil (RM583.4mil), to the Norwegian company.
The overall contract was valued at RM634.7mil.
“Norway’s action raises serious questions about the reliability of international commitments and reflects erosion of trust in relations between nations,” he added.
Despite the setback, Mohamed Khaled said only the NSM system was affected, while three other key weapons systems involving surface-to-air, surface-to-submarine and electronic warfare capabilities remained unaffected.
“However, we acknowledge that the absence of the NSM system would impact integration works, system testing and crew training, although the ships themselves were still expected to be completed according to schedule.
“The navy is currently evaluating alternative missile systems to ensure the vessels are equipped as originally planned,” he said.
On the LCS project, the minister said that as of April, construction progress for the five vessels stood at 84% for LCS 1, 79% for LCS 2, 71% for LCS 3, 60% for LCS 4 and 49% for LCS 5.
The delivery schedule remains unchanged, with LCS 1 expected to be handed over in December, LCS 2 and LCS 3 in August and December 2027 respectively, while the delivery of LCS 4 in August 2028 and LCS 5 in April 2029, he said.
Mohamed Khaled said the ministry will intensify efforts to strengthen the local defence industry to reduce dependence on foreign suppliers.
Currently, about 30% of components used in the LCS construction are sourced locally, with plans to increase local participation further, he said, pointing to the need for the local defence industry to be strengthened to reduce dependency on foreign suppliers.
