Apr 2010 Breaking news last week was that Malaysia is accelerating its efforts towards putting in place a system to regulate the export of "strategic goods & technology". The surprising factor though was that the Strategic Trade Bill (2010) and its implementing regulations are likely to go live sometime during June 2010 which is much sooner than expected.
What does it mean for you? Key observations include:
- Severe penalties - leaving aside the penalties for deliberate or fraudulent circumvention of the rules, those that may be applied for unintentional violations involving dual-use products and/or technology are particularly severe ranging from jail terms of up to 5 years and fines of up to RM10 million;
- No central enforcement authority - instead multiple agencies including Customs, the Police, the Maritime Enforcement Agency, the Communications & Multimedia Commission and others yet to be announced may all be involved in some capacity in the enforcement of export controls. The lack of one centralised enforcement authority is a real cause for concern;
- Control list yet to be announced - It is too early to tell precisely which products and technologies will be affected by these new measures and this will therefore create uncertainty for business. The expectation though is for the Control List, when it is announced, to be based upon the EU Control List. Very much a case of watch this space!
- Extra-territorial reach - For those businesses who regularly deal with US export controls the concept of extra-territorial reach will not be new. However, the precise application of this in Malaysia needs further clarification - again watch this space!
Finally - our most unexpected observation relates to a traditional concern within export controls i.e. the intangible transfer of technology. The authorities in Malaysia have gone further than many authorities in this area to the extent that in certain circumstances even an international telephone conversation about controlled technology may now be considered to be an "export of controlled technology"!
Next steps The practical implementation of export controls in Malaysia is planned to take place in a matter of months. In our experience the establishment of internal procedures to effectively manage such export controls within your business cannot be done overnight. As such, it is essential to start preparing the necessary groundwork now so that you are ready to deal with operational issues as and when the legislation takes effect.
