Strategic Trade Act 2010 to aid increase in FDIs

KUCHING: The implementation of the Strategic Trade Act 2010 (STA 2010); a legislation that controls the export, transshipment, transit and brokering of strategic items, including arms and related materials is expected to boost confidence amongst foreign investors in the Malaysian business landscape.

PROTECTING MALAYSIAN TRADE: Mohamed Shahabar speaks during the press conference held in conjunction with the STA 2010 Seminar here at the Malaysian Productivity Corporation building here yesterday.

“This will greatly aid the nation in achieving the aims of the NEM (New Economic Model) to become a high-income nation by 2020,” said Mohamed Shahabar Abdul Kareem, Ministry of International Trade and Industry (MITI) strategic trade controller.

He further added that with STA 2010 in place, Malaysia would see increased investment from American companies in technology and similarly-related operations.

“Malaysia is the second country in the Asean region to implement this after Singapore,” Mohamed Shahabar said.

Traders, exporters, cargo agents, carriers, freight forwarders, feeder operators, logistics or service providers were some of the parties that would have to take heed of the regulations under STA 2010.

Basically, the definition of ‘strategic items’ referred to goods and technology that were controlled under STA 2010. A specific list of items would be prescribed in the Ministerial Order and published in the Government Gazette.

Some of the more definitive categories included nuclear materials, facilities and equipment, electronics and computers in addition to telecommunications and information security.

Mohamed Shahabar also revealed that intangible technology such as knowledge would be subject to review under the Act.

“For example, if a lecturer wishes to give a seminar overseas, he will need to inform MITI with regards to the content of talk as certain knowledge may be misused to make weapons of mass destruction,” he concurred.

He reiterated that STA 2010 was applicable to exports only, but there were some cases where poisons such as cyanide that were imported to facilitate mining activities was then exported to a third destination.

“Take cyanide, for example. It is commonly used in gold mining activities. The minimum import amount of Chinese cyanide is 20 tonnes. However, the actual required amount for the mining activity is only one tonne. The importer could then export the other 19 tonnes for other purposes,” Mohamed Shahabar stated.

Where Sarawak was concerned, he said the implementation of STA 2010 would most affect the oil and gas (O&G) industry as core equipment such as centrifugal pumps could be used alternately to enrich uranium; a key nuclear fuel.

Another area of concern was that of manufacturing operations in the Sama Jaya Industrial Zone, where exports of electrical and electronic items such as integrated circuit chips could be used for other purposes.

“In short, we can classify strategic items as dual-use items,” he added.

Nevertheless, exporters needed to be aware of their nature of business and the type of permit they were to apply for.

For one-time use, the single permit was prescribed and would last for a duration of six months.

On the other hand, Mohamed Shahabar said companies with regular exporting activities could either utilise the bulk permit or multiple-use permit; the difference being the former was for a single destination and the latter for multiple destinations.

“As a result of STA 2010, approximately 20 per cent of the RM19 billion export market will have to licenced,” he said.

He conceded that the STA 2010 implementation in its initial stages would be tougher as exporters were still relatively new to the regulations and might apply for permits although they did not need it.

“However, with three other agencies, among them the Atomic Energy Licensing Board (AELB) assisting to ensure a smooth implementation, we are hopeful of getting this message across to the relevant parties,” Mohamed Shahabar said.

He concluded by saying that STA 2010 was intended to protect Malaysia and Malaysian exporters from being exploited by proliferators and those that profited from their activities without compromising legitimate trade in the strategic items concerned.

“STA 2010 is designed to facilitate trade in a secure trading environment,” Mohamed Shahabar summed up.

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