Kuala lumpur: The agreement not to impose any export restrictions on the supply of rare earth elements and critical minerals to the United States does not mean that Malaysia grants the US exclusive rights to these supplies. Minister of Investment, Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz clarified that this commitment stems from Malaysia’s current policy of not imposing export restrictions on such elements to any nation.
According to BERNAMA News Agency, the agreement was part of the Malaysia-US reciprocal trade negotiations, specifically under Section 5 – Economic and National Security. Discussions also covered the issue of export and transit restrictions on artificial intelligence chips from the US to certain countries. Tengku Zafrul highlighted Malaysia’s commitment to strengthen these controls by enforcing Section 12 of the Strategic Trade Act 2010, effective July 14, 2025.
The negotiations initially focused on a list of specific US requests regarding tariff reduction and elimination, but later expanded to encompass the entire range of goods imported from the US. As a result, Malaysia has pledged to reduce or eliminate tariffs on 98.4 percent of the total tariff lines. During a ministerial briefing in the Dewan Rakyat, Tengku Zafrul announced Malaysia’s agreement to exempt sales tax on US agricultural imports like fruits and seafood, while maintaining existing excise duties.
Furthermore, Malaysia has retained controls that protect local industries, including the retention of Bumiputera equity requirements in strategic sectors. There will be no blanket exemption of importer license requirements for US products, nor full liberalization of foreign equity in strategic sectors. On the digital services tax, Tengku Zafrul noted that Malaysia’s policies are based on non-discrimination principles.
Additionally, the government agreed to abolish a 6 percent revenue contribution requirement from US social media platforms and cloud service providers to Malaysia’s Universal Service Provision Fund. Malaysia also decided to repeal a directive for Domain Name System traffic to be redirected to local DNS services.
The US expressed its priority for implementing control measures on export activities to prevent circumvention of tax payments through false origin declarations. Proactively, Malaysia has tightened the issuance of Non-Preferential Certificates of Origin, with MITI becoming the sole authority to issue these certificates for all exports to the US effective May 6, 2025.