Miti requires permit for US-made AI chip exports

The Star

3 days ago

KUALA LUMPUR: The Investment, Trade and Industry Ministry (Miti) has imposed an immediate requirement for a Strategic Trade Permit on all exports, transshipments and transits of high-performance artificial intelligence (AI) chips of US origin, as part of efforts to close regulatory gaps.
Miti said the new measure falls under Section 12 of the Strategic Trade Act 2010 (STA 2010), known as the Catch-All Control provision.
It mandates individuals or firm to notify the authorities at least 30 days in advance if they intend to export, transship, or transit any item not listed in the Strategic Items List (SIL), where there is knowledge or reasonable suspicion that the item may be misused or involved in restricted activities.
'This initiative serves to close regulatory gaps while Malaysia undertakes further review on the inclusion of high-performance AI chips of US origin into the SIL of the STA 2010,' Miti said in a statement yesterday.
Miti said Malaysia takes a firm stance against any attempt to circumvent export controls or engage in illicit trade.
Any individual or company found violating the STA 2010 or related laws will face strict legal action.
'While Malaysia supports investments and trade that align with international best practices and multilaterally agreed commitments, all entities operating in the country are expected to comply with applicable international obligations to avoid secondary sanctions on their businesses,' it said.
Miti reaffirmed its commitment to maintaining a safe, secure, transparent and rules-based trading environment, and said it will not tolerate misuse of Malaysia's jurisdiction for illicit trade activities.
Commenting on the development, SPI Asset Management managing director Stephen Innes said the new export control does not directly hinder Malaysia's ongoing AI and data centre expansion efforts, which are driven by infrastructure investment, cloud partnerships and local talent.
However, it does signal tighter regulatory oversight.
'If you want to play in the AI sandbox, you now need to watch your sourcing, disclosure and compliance trail more carefully,' he told Bernama.
Innes said while multinational technology firms are likely to view this as a manageable hurdle, smaller local players or startups could face some challenges without the benefit of robust legal support.
On the chip industry itself, he said Malaysia's core strength in testing and packaging means it may be spared the brunt of disruptions.
'This law forces the industry to mature quickly in terms of compliance infrastructure. The upside is that it may accelerate Malaysia's push toward more transparent, globally integrated standards,' he added.
Meanwhile, economist Professor Geoffrey Williams said the changes in regulations showed a more cooperative approach from the tariff talks, which is a good sign.
Williams said this indicated that both sides are listening to each other and responding quickly.
'This will deliver a much better chance of lowering the 25% reciprocal tariffs and is better than taking a belligerent stance. It is a closer win-win engagement,' he said.
Williams said the United States has been concerned that AI chips are being sent to China through third countries in Asean, in breach of the US embargo.
'Therefore, getting better coordinated regulation across Asean is a positive response to address US concerns, and Malaysia is playing a key role in this,' he said, adding that this would have no significant effect on data centre and AI operations in Malaysia, except to restrict illicit activities.