Malaysia seeks more than $321m from Norway over axed defence deal

KUALA LUMPUR – Malaysia is seeking compensation of more than RM1 billion (S$321 million) from Norway after Oslo abruptly cancelled export approvals for a naval strike missile system intended for Malaysian combat ships, Malaysia’s defence minister said on May 19.

Norway has said certain export licences of specific defence technology to Malaysia were revoked due to a shift in in Oslo’s export control regulations.

The decision caught Malaysia off guard and sparked a diplomatic row, with its Prime Minister Anwar Ibrahim calling the move “unilateral and unacceptable”.

Malaysian Defence Minister Mohamed Khaled Nordin said the government would seek compensation for both direct and indirect costs, adding that Malaysia had already paid around €126 million (S$187 million), or 95 per cent of the contract value, for the missile systems.

Malaysia would also seek additional damages to cover the cost of dismantling and replacing equipment on ships built to accommodate the Norwegian-made missiles, as well as for re-training personnel, he told reporters.

Datuk Seri Khaled said Norway’s decision has raised questions over the trustworthiness of international defence partners, particularly those from Western or NATO countries.

“What has happened to us was not just a defence procurement issue. It reflects a larger problem, namely, the erosion of trust among countries in international relations,” he said.

The Norwegian Foreign Ministry said it was unable to comment on individual cases because confidentiality under the Norwegian Export Control Act is strict. It added it was looking forward to continued cooperation and constructive dialogue with the Malaysian authorities.

The defence arm of Norwegian group Kongsberg said in 2018 it had agreed on a €124 million contract with the Royal Malaysian Navy to supply NSM missiles for six littoral combat ships. Mr Khaled said last week there was also a second deal to supply the system to two other naval vessels. REUTERS