Malaysia’s Four Focus Areas on Critical Minerals

The urgent need for green transition is pushing for greater demand for critical mineral resources across the world. As a country with significant deposits of critical minerals, Malaysia needs a lot more policy dialogues about the subject, and at a much faster pace.

There are four areas that the Malaysian government should focus on:

  1. Industrial development;
  2. Developing high standards and resilience;
  3. Federal-state relationship; and
  4. The Indo-Pacific Economic Framework for Prosperity (IPEF) collaborations

For industrial development, we should note that the critical mineral industry has been identified as one of the key industries supporting the growth of high-tech industrial activities, especially in priority sectors such as electrical and electronic (E&E), electric vehicles (EV), aerospace and medical devices, under the New Industrial Master Plan 2030 (NIMP 2030).

A viable mineral industry is expected to enable the action plan under NIMP 2030 to succeed, especially to achieve Mission 1 – Advancing Economic Complexity. This sector is crucial in supporting Malaysia’s national agenda on the development of the EV industry supply chain, from high-end semiconductor production to battery making.

To develop high standards and resilience, the implementation of a specific action plan on national mineral policy under Mission 4 of the NIMP 2030 – Safeguarding economic security and inclusivity, is also critical, particularly in the down-streaming of local minerals to create the much-needed value to support our supply chain needs, and to strengthen Malaysia’s position in the global value chain.

It is important for agencies across the Malaysian government to start working on a nationally accepted high standard for the exploration, exploitation and supply chain of critical minerals. There is already a cross-ministerial council at the highest political level but there is a pressing need for the agencies to speed up work on setting up the standards and the regulatory framework. Agencies under MITI such as Jabatan Standards Malaysia and SIRIM will be part of this national effort.

The federal-state relationship brings a serious question about critical minerals. Under the Malaysian constitutional framework, lands and natural resources are under the purview of state governments. However, a race to the bottom of the states would have a devastating impact on Malaysia’s environment, and not in the national interest of Malaysia. Federal and state governments would have to find the suitable common ground to safeguard our national interests.

Through the IPEF, the United States can play a more important role. During the IPEF Ministerial Meeting in Detroit in May 2023, I raised the point that the US and other advanced member economies in IPEF should support the Southeast Asian IPEF partners to develop downstream activities for a robust and safe critical minerals sector.

The Indonesian government had followed up with a proposal to form a IPEF Critical Mineral Dialogue which was supported by the Malaysian government. The Dialogue was established at the San Francisco round with all IPEF partners, and it is time to make it a structured and active platform to chart a path for long-term collaboration.

We can gain a lot more understanding and knowledge as well as build collaboration on critical minerals by concentrating on the four focus areas.

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