Mindef Wary of Delay Tactics in RM1.06b Missile Claim

KOTA TINGGI, July 5 — The Defence Ministry has confirmed that the supplier of the Naval Strike Missile (NSM) has requested discussions regarding Malaysia’s RM1.06 billion compensation claim arising from the cancelled procurement for the Royal Malaysian Navy (RMN).

However, Defence Minister Datuk Seri Mohamed Khaled Nordin emphasized that the ministry is maintaining a highly cautious stance to ensure that any proposed talks are not used as an excuse or strategic maneuver to stall the ongoing legal and financial recovery process.

“The company has requested to meet with us. But while we are open to discussion, we do not want it to be used as a delaying tactic in the claims process. We are always aware and vigilant against any such tactics to avoid being trapped,” Mohamed Khaled told reporters today after attending the Ilmiah Keagamaan Masyarakat (PIKAT) programme at Felda Air Tawar 2.

The contract dispute stems from a decision by the Norwegian government to revoke the export licence for the NSM anti-ship missiles and their associated launcher systems on security grounds. According to the official website of Kongsberg Defence and Aerospace (KDA), the original procurement deal was signed with the RMN in April 2018 at a value of EUR124 million (RM571.9 million) to equip six new Littoral Combat Ships (LCS).

Following the unilateral cancellation of the export licence, Malaysia initiated a total claim of RM1.06 billion against KDA. This multi-million dollar compensation package comprises EUR129.86 million (RM604 million) in direct claims to recover payments already disbursed by the government, alongside EUR96.26 million (RM448.12 million) in indirect claims covering the broader cost implications and knock-on effects of the failed supply contract.

In a related development, Mohamed Khaled revealed that a dedicated evaluation team composed of specialized navy officers has already been established to identify the optimal alternative missile system to replace KDA’s Norwegian-made hardware. The panel is currently assessing prospective missile systems from four different countries.

“Yes, it’s underway, and we want it evaluated ASAP,” the minister stated briefly regarding the progress of the selection panel.

The Defence Ministry previously indicated on June 28 that it had shortlisted four potential supplying nations to fulfill the anti-ship missile system requirements for the LCS fleet following Norway’s exit. Among the leading global contenders are Turkey and South Korea, alongside two other European nations. Mohamed Khaled noted that the selection protocol goes far beyond basic technical specifications, factoring in critical strategic criteria to guarantee that the final chosen system fully satisfies the navy’s operational mandates.

-NMT