Kuala lumpur: Malaysia has proposed that Norway prioritise compensation payments following its unilateral revocation of the export licence for the Naval Strike Missile (NSM), a move that disrupted the country's Littoral Combat Ship (LCS) project. Defence Minister Datuk Seri Mohamed Khaled Nordin said Norway's decision not to approve the export licence was the primary cause of the issue.
According to BERNAMA News Agency, the root cause of the problem is Norway's decision not to approve the export licence to Malaysia. Mohamed Khaled emphasized that Norway cannot absolve itself of responsibility, as their decision led to this predicament. He conveyed Malaysia's firm position on the matter to his Norwegian counterpart, underscoring that a swift compensation refund would demonstrate Norway's sincerity in maintaining bilateral relations.
On the payment method, Mohamed Khaled proposed that the Norwegian government advance the compensation payment to Malaysia before pursuing reimbursement claims from the defence company involved. He argued that Norway could negotiate with its own company rather than leaving Malaysia in uncertainty.
The funds are urgently needed for the Ministry of Defence to procure an alternative missile system for the Royal Malaysian Navy (RMN). Mohamed Khaled highlighted that the unilateral action led to more than just financial loss, undermining international confidence in legal assurances and the validity of signed defence contracts.
Financially, Malaysia's direct losses are estimated at over RM600 million, covering the missile costs, with indirect expenses bringing the total impact to more than RM1 billion. These additional costs include procuring a replacement system, integrating a new weapons system, and new training requirements. Mohamed Khaled questioned who should bear these costs, given that the supply failure was not Malaysia's fault.
The ministry is actively evaluating alternative offers from countries like Italy, France, Turkiye, South Korea, the United States, and Japan, ensuring any replacement system is already in active production to avoid delays. While Malaysia accepted Norway's apology, Mohamed Khaled confirmed that legal action and compensation claims regarding the procurement failure would continue.
According to the Kongsberg Defence and Aerospace website, the NSM procurement contract was signed between the RMN and the company in April 2018, valued at 124 million euros (RM571.9 million), to equip six new LCS vessels.