Malaysia signed a €124-126 million (RM571.9-583 million) contract with Norway's Kongsberg Defence & Aerospace in April 2018 to supply Naval Strike Missiles for six Littoral Combat Ships [1, 2, 3]. Earlier this month, Norway revoked the export licence for the missile system, citing national security concerns and changes in export control regulations [1, 4, 5, 2, 6].
Before the cancellation, Malaysia had paid about 95% of the contract value—roughly US$146-147 million (RM571-583 million) [4, 7, 5, 2, 8, 3]. The Defence Minister Datuk Seri Mohamed Khaled Nordin urged Norway to expedite refund payments and insisted Norway cannot avoid responsibility for cancelling the deal [9, 6, 10, 11]. Malaysia seeks compensation not only for these payments but also for indirect costs including integration of a replacement system and retraining navy personnel, which could push total losses beyond RM1 billion [4, 5, 9, 6, 10, 11]. Khaled said, "Norway cannot wash its hands of this matter because its decision caused the problem" [9], and warned, "If contracts and agreements are not respected, it will affect confidence in the international system and the rule of law" [10].
During a bilateral meeting on May 31, Norwegian Defence Minister Tore O Sandvik apologized to Malaysia and explained the reasons for the cancellation, which Khaled said were "reasons we can accept, whether factual or fabricated" [2]. Malaysia criticized the unilateral cancellation as damaging to international trust. Khaled said, "If even a nation well-known for awarding the Nobel Peace Prize could abandon commitment without consequences, then I am afraid international relations are no longer governed by principles" [4]. He also noted the incident raises questions about whether strategic partnerships can still be trusted at all [12].
Malaysia is evaluating alternative missile systems from the US, Italy, France, Turkey, and South Korea to replace the Norwegian product [9, 6, 11, 3]. At the 23rd Shangri-La Dialogue in Singapore on May 29, Khaled consulted US Defence Secretary Pete Hegseth, who assured Malaysia the US would consider selling naval strike missiles as an alternative [1, 4, 7, 5, 3]. Khaled confirmed, "We have asked whether the US is willing to allow the sale of the missile to us to address the problem at hand" [1].
The contract cancellation has caused a setback in Malaysia-Norway bilateral relations, which Khaled said can only be repaired if Norway refunds the payments [5, 2]. With direct losses estimated at over RM600 million plus indirect costs, Malaysia faces a significant financial impact [9, 6, 10].
Today, June 2, Khaled publicly urged Norway to speed up the refund process, emphasizing the country's continuing responsibility for the breach and its fallout [9, 6, 10, 11].
