KUALA LUMPUR: Clause 5.2.3 of the Malaysia-US trade agreement, which sets up a joint mechanism to assess foreign investments in rare earths and critical minerals, does not directly affect state revenues, including royalties or land premiums.
Natural Resources and Environmental Sustainability (NRES) deputy minister Syed Ibrahim Syed Noh clarified that the clause does not affect state control over minerals, which remain under state jurisdiction according to the Federal Constitution’s Ninth Schedule, List II.
"Minerals fall under the states in the Federal Constitution’s Ninth Schedule, List II. Powers over land, mining leases, permits, and royalties remain with the states.
"Clause 5.2.3 does not transfer these powers to the federal government or affect state rights over mineral resources,” he said in the Dewan Negara Tuesday (Feb 24), responding to Senator Pele Peter Tinggom’s question on the implications for states if Clause 5.2.3 on critical minerals is enforced.
Syed Noh said the proposed mechanism has the potential to boost investor confidence in high-quality investments and promote domestic processing and downstream activities.
He added that it also reflects a commitment to investment security, in line with international practices such as investment control frameworks in Australia and the European Union.
"The purpose is to assess foreign acquisitions or investments that could threaten national security, strategic supply chains, or sensitive technologies. It is not a tool to override state powers,” he said.
However, he noted that for coordination and information-sharing, any foreign investment in the critical minerals sector identified as a security risk will undergo additional federal-level review before final approval, while the authority to grant mining leases and permits remains with the states. - Bernama
