MALAYSIA will hold its first round of discussions with Kongsberg Defence and Aerospace (KDA) mid-August following the cancellation of its Naval Strike Missile (NSM) supply contract, says Datuk Seri Mohamed Khaled Nordin.
The Defence Minister said the talks will focus on the status of the contract and the parties’ obligations while seeking an amicable solution following Norway’s revocation of the export licence for the NSM.
“The government’s priority is a solution that delivers the best outcome, saves time and serves the country’s interests,” he said during his ministerial explanation.
He added that the ministry is also taking immediate steps to ensure the Royal Malaysian Navy’s operational readiness is not affected by the cancellation of the NSM supply.
The navy, he said, is conducting in-depth studies and evaluations of surface-to-surface missiles that could replace the NSM system.
“If all goes well, this is expected to be completed by the end of this month before moving on to the next evaluation phase,” he added.
He noted that manufacturers from several countries had also been identified as potential suppliers of guided missiles to replace the NSM system.
“The proposals and offers will be evaluated comprehensively based on the navy’s operational requirements,” he said.
This includes compatibility with the Littoral Combat Ship’s Combat Management System, the delivery timeline, overall costs, and whether the alternative systems match or surpass the NSM system in capability, he added.
Mohamed Khaled said the issue served as a reminder that heavy dependence on external suppliers carries significant strategic risks.
“The long-term solution is not just about finding a replacement missile.
“It also requires reducing reliance on foreign sources and technologies while developing the local defence industry,” he said.
As such, he said efforts are being stepped up to implement the National Defence Industry Policy and develop a stronger home-grown defence industry.
The Norwegian government had previously revoked the export licence for the NSM anti-ship missiles and their launch systems on security grounds.
The missile supply contract was signed with the Royal Malaysian Navy in April 2018 at a cost of €124mil (RM571.9mil) to equip six new Littoral Combat Ships (LCS).
After the cancellation, Malaysia is asking for RM1.06bil in compensation from Kongsberg, which includes €129.86mil (RM604mil) for payments already made and €96.26mil (RM448.12mil) for additional costs and effects caused by the failed supply.
