Globalisation has increased the risk of transnational terrorism and spurred concerted efforts among governments to ensure a safer regional and global trading environment. Modes of production, economic relations and logistics have undergone fundamental transformation over the past 50 years. The volume of international trade has increased dramatically, with technology leading the way as the enabler in the rapid distribution of components and goods. The global supply chain is highly dependent upon transit and transshipment networks for expeditious trade and manufacturing. In this environment, export control has become a crucial element in the efforts to prevent the spread of strategic items and technologies to entities and individuals involved in the proliferation of Weapons of Mass Destruction (WMD).

Malaysia started the process of enacting the legislation on export control in 2005 after the unanimous adoption of the United Nations Security Council Resolution 1540 in 2004 by members of the United Nations (UN). The Resolution mandates member states of the UN to establish comprehensive legal and regulatory measures to control the export of strategic items and technologies. This was to address the concerns regarding the intentional abuse and misuse of certain products and technologies, particularly those that have dual-purpose use, in the military and in normal everyday use, which may facilitate the design, development and production of WMD and their delivery systems.

The Strategic Trade Act 2010 (STA) was published in the Government Gazette on 10 June 2010 and was enforced on 1 April 2011. The STA provides for control over the export, transshipment, transit and brokering of strategic items, including arms and related material, and other activities that will or may facilitate the design, development and production of WMD and their delivery systems.

Malaysia is the second country in ASEAN to have an export control law in place. The Strategic Trade Secretariat (STS) was established in the Ministry of International Trade and Industry (MITI) on 1 August 2010 to coordinate the implementation of the Strategic Trade Act (STA) 2010. There are three other partner licensing agencies under the Strategic Trade Secretariat, namely the Atomic Energy Licensing Board (AELB), Malaysian Communications and Multimedia Commission (MCMC) and Pharmaceutical Services Division assisting in the licensing process, particularly for strategic items and technologies in which they have expertise and responsibility under related laws which are in their custody and ownership.

Every individual or business entity involved in the activities of brokering, exporting, transit and transshipment of strategic items are required to comply with STA 2010 by obtaining a STA permit or broker certificate prior to undertaking the related activities. Since the implementation of STA 2010 is based on self-declaration, the responsibility to declare products as strategic items lies on the person/entity undertaking the related business activity. However, the Strategic Trade Secretariat at MITI can assist in forwarding the samples and technical specifications of the products to related Government agencies for testing. The costs incurred would have to be borne by the person/entity requesting for assistance in the classification.

The Strategic Items List in the Strategic Trade Order 2010 was adopted from the European Union’s Export Control List. The main categories are:

Categories of permits available are:

1. Single-use permit: A one-time export, transit or transshipment permit for a country or destination. The permit is valid for 6 months.
   Special permit: A single-use export, transit or transshipment permit to a restricted end-user. The permit is valid for 12 months.
2. Bulk permit: A permit for multiple exports or transshipments to a single country or destination. The permit is valid for 24 months. However, only applicants with Internal Compliance Programmes (ICP) will be considered for this permit. ICP is basically a set of procedures that companies must satisfy before an item is exported to ensure that the transactions satisfy the export control regulations.
3. Multiple-use permit: A permit for multiple exports or transshipment to different countries or destinations. The permit is valid for 24 months. Similar to the bulk permit, only applicants with ICP will be considered for this permit.

Brokers are required to register to obtain a broker certificate, which is valid for 12 months.

The application for permits under the STA has been available online since July 2011 allowing for faster decision-making and issuance of permits in a cost-efficient manner. While the permits have been issued for some time now, a new landmark has been reached where the permits are validated by the Royal Malaysian Customs effective 1 March 2012. This essentially means that effective enforcement of STA 2010 has started. Outreach programmes for domestic industries and law enforcement agencies are being conducted continuously to ensure a high level of awareness and compliance to the law as well as to ensure there is minimal disruption to trade.

In ensuring that STA 2010 remains relevant and pragmatic to the business community, several amendments to STA Regulations have been made effective 1 December 2011. This action was undertaken in response to feedback from the industry and the Secretariat’s experience in implementing STA 2010 in the past year. These amendments are part of the Government’s continuous efforts in ensuring that the regulations are business friendly so that compliance by the industry can be further facilitated.

STA 2010 is not intended to hinder legitimate trade but seeks to strike a balance between Malaysia’s economic interests and national interests as well as address global security concerns. In this increasingly competitive trading environment, business communities cannot undertake their activities without adapting to the ever-changing trading climate around them. Compliance to STA 2010 will reinforce the reputation of Malaysian companies as responsible traders and eventually enhances the positive image of Malaysian companies among the global business community.

For more information on the Strategic Trade Act 2010 (including the comprehensive strategic items list, procedures on application of permits, list of restricted and prohibited end-users, circulars and announcements), please visit www.miti.gov.my>STA 2010.

Kindly take note of the amendments made to the Strategic Trade Regulations 2010 and be alert of the validation of permits effective 1 March 2011 by the Royal Malaysian Customs.

For enquiries, feedback and comments on STA 2010, please e-mail admin.sts@miti.gov.my or contact our Hotline at 03-6203 9846.

We also invite face-to-face interactions and consultations with our stakeholders and for this purpose we have designated every fourth (4th) Wednesday of the month as STS Client Day. This will be held from 10.00am – 12.00pm at the Ministry of International Trade and Industry, Strategic Trade Secretariat Office, Block 8, Level 12, Government Offices Complex, Jalan Duta 50622 Kuala Lumpur.

The STS Client Day for February 2012 and March 2012 is scheduled for 22 February 2012 and 28 March 2012 respectively. Please e-mail admin.sts@miti.gov.my to register.

The Secretariat will increase the number of such meetings if there is demand from our stakeholders.