In more detail

Based on the public consultation document and discussions during the Engagement Session, there will be 33 proposed amendments and five new provisions to the STA and its subsidiary legislation. There will also be three new proposed subsidiary legislation. During the Engagement Session, MITI announced that the intended effective date for the amendments is 1 January 2026, contingent upon the timely enactment of the relevant legislation.

The key proposed changes and updates are as follows:

1. Proliferation Financing: Adding the term "proliferation financing" to the STA to ensure alignment with the anti-money laundering laws in Malaysia to combat and regulate financial transactions that may contribute to the development of weapons of mass destruction.
    
2. Strategic Item List ("Control List"): Amending Section 7(1) STA to allow the MITI to prescribe items designated as strategic items by notification or other form of announcement in a manner as determined by the Strategic Controller. This change is intended to ease the implementation of the changes to the Control List which currently requires strategic items to be prescribed by order published in the Gazette. This allows the Control List to be updated from periodically in a timely manner.
    
3. Brokerage Registration:
   1. Validity Period: Extending the validity period of brokerage registration under Section 19(6) STA from one (1) year to two (2) years. This allows businesses conducting brokering activities to better plan their business and ensure operational continuity.
       
   2. Scope of Registration: Limiting brokerage registration to specific military items, as opposed to all strategic items, including dual-use goods. This reduces the regulatory burden for both businesses and the government, by ensuring that resources are concentrated to preventing the proliferation of the most dangerous goods, i.e., military items.
4. Global Permit: Introducing a new permit called the 'Global Permit,' which aims to provide a conducive business environment and increase business efficiency.
   1. Purpose: A single Global Permit can be used as both a multiple-use permit and a bulk permit. Currently, a company is able to apply for either a multiple-use (export to a single country) and bulk permits (export to multiple countries), upon establishing an Internal Compliance Programme (ICP) that has been approved by MITI.
       
   2. Validity Period: The Global Permit is valid for a period of three (3) years instead of the current two (2) years for multiple-use and bulk permits respectively.
5. Documentation:
   1. Simplification of Forms: Reviewing the statutory forms (i.e., Forms 1 to 10) including permit application forms, end-use statement and delivery verification statements to provide clarity and facilitation to businesses.
       
   2. End-Use Statement (EUS): Amending Section 14(2) STA to make the submission of EUS or similar documents mandatory for permit applications. This aims to align with existing Regulation 14 of the Strategic Trade Regulations 2010 to ensure better monitoring of the end-use of the strategic items.
6. Intangible Technology Transfer: Introducing a new set of regulations to provide facilitation to academia and researchers by requiring notification instead of permit application when making intangible technology transfer.
    
7. Strategic Trade Expert and New Evidentiary Rules in court proceedings:
   1. Strategic Trade Expert: Adding a new provision to the STA to formally recognize technical officers as Strategic Trade Experts for prosecution purposes. This is to safeguard their credibility and ensure that their expertise is legally recognized in proceedings. Experts' testimony will be based on documentation and no testing is required.
       
   2. Evidentiary Rules in court proceedings: Adding new provisions under Sections 42(2) and 42(3) of the STA to ensure that documents and digital records obtained by authorized officers are admissible in court, with authenticity safeguards.
8. Authorized Officers:
   1. List of Authorized Officers: Expanding the definition of "authorized officers" under Section 2 of the STA to include officers of the Malaysia Marine Department, Civil Aviation Authority Malaysia, Malaysian Aviation Commission, and Port Authority to increase enforcement powers.
       
   2. Powers of Authorized Officers: Amending Section 28 of the STA to strengthen the enforcement capabilities of authorized officers during inspections to verify whether items are classified as strategic or unlisted, including examining related documents and digital data.

Remarks

In an era where strategic items control is increasingly pivotal in global trade, these updates are a significant step towards harmonizing domestic legislation and international standards, increasing enforcement powers and simplifying compliance procedures for businesses.

While some of these proposed changes enhance compliance efficiency for businesses, other updates may present challenges for businesses. For instance, the enhancement of the powers of the authorized officers, mandatory submission of EUS and the inclusion of proliferation financing could increase regulatory burdens on businesses.

Given the rising scrutiny on the export of strategic goods and technology globally, businesses should carefully monitor the proposed amendments to understand both the opportunities and challenges they present. Staying informed and adapting to these changes will be crucial for ensuring seamless trade operations and maintaining compliance with the new rules which are aimed to take effect from 1 January 2026 onwards.

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The following have contributed to this legal update:

• Ivy Tan, Senior Associate
• Jeff Sum, Senior Associate
• Chloe Ng, Legal Assistant

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