Govt seeks RM1.06 billion in compensation over cancelled naval missile deal

MALAYSIA is seeking RM1.06 billion (€226.13 million) in compensation from Norway's Kongsberg Defence & Aerospace AS (KDA) following the cancellation of a contract to procure Naval Strike Missiles (NSM) for the Royal Malaysian Navy's Littoral Combat Ship (LCS) programme.

Defence Minister Datuk Seri Mohamed Khaled Nordin said the government's claim comprises €129.86 million in direct losses, representing payments already made under the contract, and a further €96.26 million in indirect losses arising from additional costs and consequential damages resulting from the failure to deliver the missile system.

"The actual additional costs, or 'overrun costs', to be borne by the government have yet to be finalised as they depend on the settlement method agreed upon and the replacement weapons system currently under evaluation," he said in a written parliamentary reply.

Khaled was responding to a question from Datuk Seri Ikmal Hisham Abdul Aziz (PN–Tanah Merah), who sought an update on the sea trials for KD Maharaja Lela and the financial implications of the cancelled NSM procurement.

The minister said the amount of any eventual cost overrun remains uncertain because it will depend on the outcome of negotiations and the selection of a replacement missile system for the LCS fleet.

On the progress of the country's first Littoral Combat Ship, Mohamed Khaled said KD Maharaja Lela is undergoing a phased programme of testing and evaluation to verify the performance of its platform, navigation, propulsion and other critical onboard systems before it can be formally accepted into service by the Royal Malaysian Navy.

He said the Sea Trial conducted by Lumut Naval Shipyard (LUNAS) on April 29 proceeded according to schedule and had demonstrated "positive progress".

"The vessel's formal acceptance remains subject to the successful completion of the Sea Acceptance Trial, the rectification of any technical findings and final verification by the Royal Malaysian Navy," he said.

The latest update comes as the government continues efforts to complete the long-delayed Littoral Combat Ship programme while pursuing compensation for losses incurred following the cancellation of the missile procurement contract. - June 26, 2026