TLDR: Effective immediately, Malaysia’s trade ministry has mandated a trade permit for the export, transshipment, and transit of high-performance artificial intelligence (AI) chips originating from the United States, aiming to close regulatory gaps and prevent illicit trade.
KUALA LUMPUR – In a significant move to tighten its export control framework, Malaysia’s Ministry of Investment, Trade and Industry (MITI) announced on Monday, July 14, 2025, that all exports, transshipment, and transit of high-performance artificial intelligence (AI) chips of US origin will now require a Strategic Trade Permit. This new regulation is effective immediately.
The decision falls under the ‘catch-all control’ provision of Section 12 of the Strategic Trade Act 2010 (STA 2010). This provision mandates that individuals or companies must notify the relevant authorities at least 30 days in advance if they know or have reasonable grounds to suspect that an item, even if not explicitly listed in the Strategic Items List (SIL), could be misused or utilized for restricted activities.
MITI stated that this measure is designed to close existing regulatory loopholes while the country conducts a comprehensive review on whether these high-performance AI chips should be formally included in the Strategic Items List. The ministry emphasized Malaysia’s firm stance against any attempts to circumvent export controls or engage in illicit trade activities, warning that strict legal action would be taken against any party found in breach of the STA 2010 or related laws.
This development comes amidst increasing international scrutiny and pressure, particularly from the United States, on countries like Malaysia to prevent the diversion of advanced AI chips to destinations such as China. Reports in March indicated that the US has been urging Malaysia to staunch the flow of chips crucial for AI development to China. Malaysia has also been investigating potential breaches of local laws in the shipment of servers linked to a Singapore fraud case, which may have contained advanced chips subject to US export controls.
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While reaffirming Malaysia’s support for investments and trade aligned with international best practices and multilateral commitments, MITI underscored that all entities operating within the country must comply with relevant international obligations to mitigate the risk of secondary sanctions. The ministry reiterated its commitment to fostering a safe, secure, transparent, and rules-based trading environment, asserting that it will not tolerate any misuse of Malaysia’s jurisdiction for illicit trade.
