Malaysia demands $250M compensation from Norway over cancelled missile deal

May 21, 2026, by Fatima Bahtić

Malaysia is seeking more than $250 million in compensation from Norway after Oslo revoked export approvals for a naval strike missile system intended for the Royal Malaysian Navy.

Photo: naval strike missile; Credit: Kongsberg

Malaysia’s Defense Minister Mohamed Khaled Nordin said Kuala Lumpur had formally notified Norway of its compensation claim, which includes both direct and indirect losses linked to the halted procurement program, Reuters reported.

As the minister revealed, Malaysia had already paid approximately $146.6 million (€126 million), around 95% of the total contract value, for the missile systems before Norway withdrew the export licenses.

The compensation demand also covers the cost of dismantling and replacing equipment installed on Malaysian combat ships that had been specifically configured to carry the Norwegian-made missiles. Additional claims include expenses tied to retraining naval personnel following the abrupt cancellation.

Norway previously stated that the revocation stemmed from changes to its export control regulations affecting certain defense technologies destined for Malaysia.

The decision triggered a diplomatic dispute between the two nations, with Malaysian Prime Minister Anwar Ibrahim criticizing the move as “unilateral and unacceptable.”

Malaysia stressed that it has fully honoured all contractual obligations under the agreement since 2018, describing its conduct as “scrupulous and faithful,” and accusing Norway of failing to extend the same level of good faith in return.

Norway halts NSM missile exports to Malaysia, triggering diplomatic backlash

Authorities

The original NSM contract was signed in April 2018, when Kongsberg Defence & Aerospace secured a contract worth €124 million with the Royal Malaysian Navy for the delivery of naval strike missiles for six new littoral combat ships.

According to the latest update of the Ministry of Defense, the LCS program ecorded overall physical progress of 77.46 percent as of April 2026.

LCS1 is currently undergoing sea trials as the final validation phase before the implementation of sea acceptance trials with the Royal Malaysian Navy. Meanwhile, LCS2 is scheduled to conduct its maiden voyage in the fourth quarter of this year.

For LCS3, the ship is currently in a high-intensity construction phase, while LCS4 is expected to undergo its first downslip by the end of the year. LCS5 continues to show steady progress with the successful installation of four main diesel generators and the implementation of factory acceptance tests for the combat management system.

The first ship of the LSS program is scheduled for delivery in December this year.