Trade Permit Requirement For AI Chips Shows Malaysia's Commitment To Transparency, While Curbing Illicit Activities

By Rosemarie Khoo Mohd Sani

KUALA LUMPUR, July 14 (Bernama) -- The trade permit requirement for US artificial intelligence (AI) chips signals Malaysia’s commitment to transparency and global standards, as well as curbing illicit activities in the AI ecosystem.

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 when asked on the Ministry of Investment, Trade and Industry’s (MITI) announcement today.

The ministry has said it will impose an immediate requirement for a strategic trade permit on all exports, transhipments and transits of high-performance 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 companies 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.

Innes further said that while multinational technology (tech) 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, Innes 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.

Innes also noted that Malaysia’s existing export framework was not necessarily lacking transparency, but had 'blind spots' in dealing with dual-use technologies like AI chips.

Meanwhile, economist Professor Geoffrey Williams said the changes in regulations show a more cooperative approach from the tariff talks, which is a good sign. 

He 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 per cent 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 and AI centre operations in Malaysia, except to restrict illicit activities.

-- BERNAMA