Malaysia seeks $251 million from Kongsberg after Norway revokes permit, scuttling missile deal

KUALA LUMPUR: Malaysia's government said on Tuesday that it was seeking $251 million in compensation from Norwegian company Kongsberg Defense & Aerospace AS, after Norway abruptly revoked an export permit that scuttled a naval missile defense deal for Malaysia's combat ships.

Defense minister Mohamed Khaled Nordin said that the government had issued a formal notice of demand to Kongsberg following the cancellation, which blocked the delivery of the Naval Strike Missile (NSM) system, and launcher components that Malaysia had already largely paid for.

"We are claiming both direct and indirect costs. The direct cost amounts to 126 million euros ($146 million) which has already been paid," he said. "We are also seeking substantial indirect costs, bringing the total claim to about 1 billion ringgit ($251 million)."

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, he said.

Malaysia inked a deal for the NSM anti-ship missile system in 2018 for Kongsberg to arm Malaysia's new class of littoral combat ships under a broader naval modernization program.

Norway's foreign ministry said that the government has strengthened oversight, with sales of its most sensitive defense technologies now restricted to the country's allies and closest partners. The cancellation sparked sharp protests from the Malaysian government.

Khaled described the move as a serious breach of trust that could undermine confidence in international defense procurement deals.

"What happened to us is not just a defense procurement issue, but reflects an erosion of trust in international relations," he said. "When such commitments can be unilaterally revoked, confidence in the entire system begins to erode."

Norway's foreign ministry acknowledged receiving queries from The Associated Press, but hasn't provided a response. Kongsberg officials couldn't be immediately reached for comment.