Introduction

In order to export, tranship or bring in transit a strategic item, a permit is required. This is in accordance with section 9(1) of the Strategic Trade Act 2010 (“STA 2010”), where it states that “no person shall export, tranship or bring in transit strategic items unless he obtains a permit issued under this Act”. This article will look at what constitutes a strategic item and the ability and manner to request a technical review on an item that might be wrongly classified as a strategic item.

What are the strategic items?

According to section 7(1) of the STA 2010, the Minister may by order published in the Gazette, prescribe any items as strategic items under the Act. A strategic item is an item that meets the item description under the Strategic Trade (Strategic Items) (Amendment) Order 2018 ("STO 2018"). The STO 2018 reflects the items currently required to be controlled under the international export control regimes as well as the relevant United Nations Security Council Resolutions. For example, any "high-speed pulse generators" and "pulse heads", having the following characteristics:

such item will be categorised as a strategic item under the category code of 3A230 under the STO 2018. In order to export, tranship or bring in transit such strategic item, a permit will have to be applied for.

Pursuant to section 13 of the STA 2010, any matters regarding permit and registration will be dealt with by the relevant authority designated according to the type of strategic item specifically.

Based on the STO 2018, for category code of 3A230, a permit will be required from the relevant authority which is the Atomic Energy Licensing Board ("AELB").

What if an item is incorrectly categorized as a strategic item?

There will come a situation where a particular item is categorised as a strategic item by the STS, but in fact such item does not meet the item description of that particular category code under the STO 2018. As a consequence of this situation, a requirement for a permit would be imposed on that item for it to be exported.

Nonetheless, section 7(2) of the STA 2010 reads to the effect that if any question arises as to whether any item is or is not included in a class of items appearing in the STO 2018,

such question shall be decided by the Strategic Trade Controller, who is the authoritative individual leading the Strategic Trade Secretariat ("STS"). Hence, such situation could be rectified by having the STS conduct a technical review on the concerned item.

Roles of the Strategic Trade Secretariat ("STS")

The STS was established under the Ministry of International Trade and Industry ("MITI") on 1 August 2010 to coordinate the implementation of the STA 2010.

The STS has to perform the following functions:

As mentioned, in the situation where a dispute arises as to whether a particular item is a strategic item, a proper technical review on the concerned item can be requested to the STS. The STS has will then perform the requested technical review by conducting a detailed and thorough analysis of the readings of the item. The analysis of the concerned item will then be compared to the item description that is listed in the STO 2018.

How to request for a technical review on an item?

To request the STS to conduct a thorough technical review on the concerned item, the usual approach would be by writing to the STS requesting a technical review to be done. The request can easily be done by way of email to the STS, attaching the relevant documents.

It is important to provide all the relevant information for the STS' experts to conduct a technical review on the concerned item such as a complete product specification of the item.

This would require the engineers and experts of the manufacturer of the item to prepare and provide accurate readings of the item beforehand.

The average duration for STS to conduct a technical review is five business days. However, this highly depends on the complexity of the item and whether the information provided by the applicant is complete in the first place. Hence, to ensure that the review is done effectively, the applicants are advised to ensure that they provide all the information required in the email.

In rare circumstances, the officers from the STS would also pay a visit to the manufacturing site to review the item. For certain items, the samples and specifications of the item may be required to be submitted to the STS for further evaluation.

If the evaluation incurs cost for laboratory testing, it should be borne by the applicant. However, this may be treated as a last resort as it may take longer time as it needs to be sent to technical institution for their determination.

Issue of confidentiality

By sending all the relevant information of an item to the STS for technical review via email may raise the issue of confidentiality. The applicant may not want to have all of the classified readings, product specification, composition of materials used to manufacture and other relevant information of the item disclosed to the STS, especially in the form of softcopy (via email), where the information can be stored and easily transferred to other bodies or individuals.

Thus, some applicants may prefer to hand in hardcopy of the relevant documents, that is by sending the request letter by hand to the STS so that the availability of the classified information would not be easily accessible as compared to sending the request letter by email.

Additional grounds to support the technical review

The applicant is also advised to obtain further confirmation from relevant authorities in other jurisdictions to prove that the concerned item is not in fact a strategic item under the STO 2018.

It should be noted that the Regulation (EC) No 428/2009 of the European Union ("Council Regulation") and the Commerce Control List of the US ("CCL") have similar item description as provided in Malaysia's STO 2018.

By having written confirmation from the relevant authorities in other jurisdictions such as the "Export Control Organisation by the Department for International Trade United Kingdom" and the "United States Department of Commerce Bureau of Industry and Security, Washington DC", the standing of the review will be significantly strengthened.

It is highly possible that the STS will reach a similar conclusion with the written opinions provided by the relevant authorities as mentioned above from the UK and US, as our export control legislations are derived primarily from those specific countries.

Furthermore, the strategic item list under the STO 2018 is also largely based on the Council Regulation and the CCL. With that being said, it is believed that Malaysia would not impose a more stringent approach regarding the interpretation of the item description as compared to the UK and US.

Conclusion

Once a detailed technical review or re-assessment on the concerned item is made and compared to the item description in the STO 2018, it is mandatory for the STS to revoke the requirement of a permit for the said item, provided that the readings of the item does not, in fact match with any item description in the STO 2018.

Prepared by: Daphne Sue Suet Yan, Lim Meng Hui & Narina Aireen Hilmy Zaini