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Objective of STA 2010

CONTROLS(Catch-all)

design productiondevelopment

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•2012 •2013 •2011 •1 Jan 1 Apr •1 Jul 1 Mar •25 Mar 5 Apr 6 May 2 Jun 10 Jun 31 Dec

2014

• STA 2010

� Cabinet � GRP-RIA

� Parliament � Gazette

� Royal Assent

� Gazette Regulations & Orders

• Enforcement Category 0

• Enforcement

� Online Permit Application

� Permit Validation by Customs

� e-STA, Outreach, Training, Enforcement,Audit, Investigation

Timeline

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Why Should the Business Community Be Concerned?

• With the increase in focus on international tradesecurity, manufacturers, traders as well as freightforwarders (FFs) and transportation companiesare not exempt from this responsibility under theSTA. All have to comply with STA 2010

• All who deal with strategic goods should beaware of their liability i.e. cannot excuse yourselffrom your responsibility if you are found to beinvolved. Ignorance of the law is not an excuse

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Important to note….

• STA is not only for those who deal with guns,ammunition, bombs (military items), dangerouschemicals or biological products (virus, bacteria,toxins)

• STA is related to the industries that many wouldterm as normal/safe such as oil and gas,electronics, telecommunications, engineering,machinery and equipment (dual-use items)

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Simple scenario…to be safe

� If you are exporting pipes, valves,telephones, computers, cameras,thermometers, industrial chemicalsand even if you manufacture cosmetics

ü you have to check if you require a STApermit to export, bring in transit,transship or broker these items

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And….ITT

� Even if you are a consultant or service providerand do not deal with any physical product, youshould also check if you require a permit becauseSTA also covers transfer of technology; bothtangible and intangible (blueprints, diagrams,manuals, emails, fax, telephone calls,seminars, lectures, online data etc)

v In conclusion - all who deal with strategic itemsshould be aware of their liability i.e. cannotabsolve responsibility if you are found tobe involved. Ignorance of the law is not an excuse

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Why is this STA only in Malaysia…

It is not only in Malaysia- Malaysia is the second ASEAN economy

to implement a Strategic Trade Law

- Other ASEAN economies have also started to formulaterelevant laws to implement strategic trade management intheir countries

- Malaysia now has an added advantage over ourneighbouring countries, not everything is about costcompetitiveness anymore, trade security is highly relevantand crucial

- With STA, Malaysia gives this assurance that trading withMalaysian companies is safe because they are compliant tothe STA 2010

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Why is this STA only in Malaysia…

- Most if not all of your customershave some form of strategictrade law enforced in their owncountry (also known as exportcontrol)

- The EU, USA, Japan, Hong Kong, Chinese Taipei, Australia havemany years of experience in implementing this law. There is agreater emphasis on the roles of economies in the ASEANregion now to ensure the safety of global trade

It is an International Practice

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How do I check if my products/services are strategic items?

• The ONLY way to do this by yourself is bychecking against THE LIST

• THE LIST = Strategic Items under the STA 2010

• THE LIST = is not a list that MITI came up withbut it is based on the international andcommonly used European Union’s ExportControl List for Military and Dual-Use items

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Steps for Identifying Products/ Services Under STA 2010

www.miti.gov.my (Home>Guidelines>Strategic Trade Act 2010>STA 2010 Info Pack)11

STA 2010 Info Pack> Strategic Items Under The STA 2010> Microsoft Word Doc.22

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Click > Key-in keywords of the Products/ Services > Find / Search 33

polymer

Why can’t MITI check for me?

• STA is implemented through self-declaration• The exporter/company bringing in transit/

transshipping/ brokering of the strategic itemsis EXPECTED to know the details of theproducts / services (i.e: who, what, where,when and how)

• As such, even if MITI checks for you, it is stillyour responsibility. If there is a violation, youwill be charged

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But this is troublesome…

• Consider this:- Malaysia is viewed by some as among the many

strategic locations for illicit trading activitiesrelated to the proliferation of WMD

- Even if your business is remotely linked to such atransaction:F You may impact the image of the countryF You may be blacklisted by most of Malaysia’s

major trading allies/partnersF You may lose your customers/business

Some past cases implicating Malaysians…

• There have been a few cases whereMalaysians have been involved in the exportcontrol violations of other countries. Evenwhen there was no export control law inMalaysia at the time of conviction, there is noescape from the long arm of the Law.

• Just like STA 2010, other export control lawsare extraterritorial.

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MALAYSIAN FREIGHT FORWARDER IMPLICATED IN SCHEME TO EXPORT AIRCRAFT PARTS TO CHINA AND IRAN

On August 28, 2008 Desmond Dinesh Frank – Freight Forwarder based inPenang, a citizen and resident of Malaysia was sentenced to 23 months in prisonin the US after pleading guilty to several felonies in connection with a plot toillegally export aircraft parts (military items) to China and Iran.

Desmond the operator of Asian Sky Support Sdn Bhd, Malaysia conspired in 2007to illegally export C-130 military aircraft training equipment to China, illegallyexporting defense articles, smuggling and two counts of money laundering. Healso conspired to illegally export and cause the re-export of goods, technologyand services to Iran without first obtaining the required authorisation from theUS Treasury Department. He was also found guilty of conspiring to illegally exportmilitary training components used in military flight simulators from the USA toMalaysia and ultimately to Hong Kong China without the required license fromthe US.

There were two other Malaysians involved and were formally charged (indicted) in2008 but were not extradited. Several accomplices from Hong Kong have alsobeen indicted. In Oct 2007 Desmond was arrested by ICE (US Immigration andCustoms enforcement) agents in Hawaii .

Source: Bureau Of Industry And Security , US Dept of Commerce and various others

FOUR SINGAPOREANS EXTRADITED TO THE US

In Feb 2012, four Singaporeans were extradited to the US on charges of funnelingthousands of radio frequency modules from the US to Iran. An Iranian citizen wasalso charged. The US indictment alleged that the Singaporeans conspired to buy6,000 radio frequency modules from an unidentified company in Minnesota andship them through Singapore to Larijani in Iran.

16 of the radio frequency modules were found in improvised explosive devices(IEDs) in Iraq. The explosive devices are often the weapon of choice for militants inIraq, who regularly used them to attack US and coalition convoys.

The US has in the past noted that Singapore – a major global transhipment portneeds to tighten its export controls, in particular of so-called ‘dual-use’ items,which can have both a civilian and military purpose. The radio frequency moduleshave commercial applications that include wireless local area networks to connectprinters and computers in offices.

Source: CNN

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FEDEX SETTLES CHARGES FOR UNLICENSED EXPORTSJan 4, 2012-Washington – FedEx Express (FedEx), Memphis, TN, has agreed to paya $370,000 civil penalty to settle allegations that it committed six violations of theExport Administration Regulations (EAR) relating to FedEx’s provision of freightforwarding services to exporters.

The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) alleged that FedEx caused, aided and abetted acts prohibited by the regulations when it:

- in 2006 facilitated the attempted unlicensed export of electronic componentsfrom the United States to Mayrow in Dubai, United Arab Emirates.

- in 2005, facilitated the unlicensed export of flight simulation software to Beijing University of Aeronautics and Astronautics, a/k/a Beihang University, an organization listed on the U.S. Department of Commerce’s Entity List and located in the People’s Republic of China.

- in 2004, facilitated the unlicensed export of printer components from the United States to end users in Syria.

The Commerce Department Assistant Secretary for Export Enforcement David W. Mills said, “It is vital that every stakeholder in the U.S. exporting chain remain vigilant in its efforts to prevent prohibited transactions that may be detrimental to our national security, and each will be held accountable if it fails to do so.”Source: Bureau Of Industry And Security , US Dept of Commerce

TWO EXTRADITED FROM SINGAPORE

Dec 21, 2012-Washington – Hia Soo Gan Benson, aka “Benson Hia,” and Lim KowSeng, aka “Eric Lim,” have been extradited from Singapore to stand trial in the District of Columbia in connection with an alleged fraud conspiracy involving the unlawful export of 55 military antennas from the United States to Singapore and Hong Kong.

Hia and Seng, both citizens of Singapore, were arrested by Singaporean authorities on Oct. 24, 2011, in connection with a U.S. request for extradition. Each defendant faces one charge of conspiracy to defraud the United States by violating the Arms Export Control Act. If convicted, each defendant faces a potential sentence of five years in prison.

Hia and Seng are alleged to have, among other things, conspired to undervalue the antennas to circumvent U.S. regulations on the filing of shipper’s export declarations to the U.S. government. They also allegedly used false names and front companies to obtain the antennas illegally from the United States.

Source: Bureau Of Industry And Security , US Dept of Commerce

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• Customer overseas requesting items to betransshipped or re-exported to restrictedcountries (North Korea, Iran, Congo, IvoryCoast, Lebanon, Sudan, Afghanistan, Iraq,Liberia, Rwanda, Somalia, Eritrea and Libya)

• Information on the item to be shipped out issketchy/limited (usage and description notclear)

You Should Be Extra Cautious If…

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• Shipping route is abnormal• Packaging is inconsistent with the stated

method of shipment or destination• Product’s capabilities do not fit buyer’s line of

business – e.g. automotive parts to a bakery(individuals and freight forwarders stated asend-users)

You Should Be Extra Cautious If…

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• Check whether the item is a strategic item (list is in MITI’s website), request customer to indicate or check with STS

• If item is strategic, ensure a STA permit has been obtained by your customer

• If customer indicates items is not strategic but you are doubtful, make sure technical specifications are obtained from your customer for STS to assist in classification

How To Comply With STA?

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• As the middle-man, know your customer and your customer’s customer

• Check whether the consignee and end-user or recipient is a restricted or prohibited under the STA

How To Comply With STA?

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ARMS &

RELATED MATERIALS

Resulted in DEATH:• death sentence; or • Imprisonment: natural life (body corporate: ≥ RM 30 million)

OTHER CASE:• Imprisonment:: ≥ 10 years; or• Fine: ≥ RM10 million; or both (body corporate: ≥ RM20 million)

• Imprisonment: ≥ 5 years; or• Fine: ≥ RM5 million; or both (body corporate: ≥ RM10 million)

# Severity of penalty: depends on intent and knowledge to unlawfully export, tranship or bring into transit without a permit

w/o intent &

knowledgew/ intent

&knowledge

Penalties

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LISTED&

UNLISTED ITEMS

• Imprisonment: ≥ 10 years; or• Fine: ≥ RM10 million; or both (body corporate: ≥ RM20 million)

• Imprisonment: ≥ 5 years; or• Fine: ≥ RM5 million; or both (body corporate: ≥ RM10 million)

# Severity of penalty: depends on intent and knowledge to unlawfully export, tranship or bring into transit without a permit

w/o intent &

knowledgew/ intent

&knowledge

Penalties

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• Transit and Transhipment

– arrive in a Free Commercial Zone (FCZ) or brought immediately into FCZ

– remain in the FCZ

– not exceeding 30 days

* 95% of transit and transshipment of strategic items are exempted from applying for permits.

Exemption

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HOWEVER, THE EXEMPTION DO NOT APPLYTO THE FOLLOWING COUNTRIES

North Korea Iran Congo Ivory Coast

Lebanon Sudan Afghanistan Iraq

Liberia Rwanda Somalia Eritrea

Libya 28

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� No exemption for Transhipment Permit forSchedule Three items of the STA Regulations2010, e.g:

v Military items – rifles, revolvers, pistols,ammunitions, bombs, torpedoes, rockets,missiles, war vessels, war aircrafts

v Nuclear reactors, gas centrifuge plantv Uranium, maraging steel, tungsten,

molybdenumv Toxic chemicals, human pathogens

And…..

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• STA will be implemented more effectively in Free Commercial Zones

• Amendments to ZB Forms

• Zone Authorities will be authorised

• Operations will be conducted in KLIA and at Ports

What You Can Expect In The Future

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� 1 July 2011: compulsory product declaration field inthe Customs declaration forms - strategic items ornon-strategic items.

� If declared as strategic items, the system will promptfor the STA permit number.

Self Declaration

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Categories of Permit

PERMIT

SINGLE-USEONE-TIME EXPORT, TRANSHIPMENT OR BRING IN TRANSIT PERMIT

for a SINGLE COUNTRY / DESTINATIONValid for 6 months

SPECIALONE-TIME EXPORT, TRANSHIPMENT OR BRING IN TRANSIT PERMIT

for a SINGLE COUNTRY / DESTINATION which the end-user is a RESTRICTED END-USER

Valid for 1 year

MULTIPLE- USE (*NEEDS INTERNAL COMPLIANCE

PROGRAMME (ICP))

MULTIPLE EXPORTS, TRANSHIPMENT or

BRING IN TRANSIT of the items for MULTIPLE

COUNTRIES/ DESTINATIONSValid for 2 years

BULK (*NEEDS ICP)MULTIPLE EXPORTS, TRANSHIPMENT or

BRING IN TRANSIT of items for a SINGLE

COUNTRY / DESTINATIONValid for 2 years

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LICENSING MINISTRY/AGENCIES

Strategic Trade Secretariat, MITI

Malaysian Communications and

Multimedia Commission (MCMC)

Atomic Energy Licensing Board

(AELB)

Pharmaceutical Services Division, Ministry of Health

ENFORCEMENT AGENCIES

Royal Malaysian Customs

Royal Malaysian Police

Malaysian Maritime

Enforcement Agency

MCMC

Other officers specified by

the Controller

Partner Agencies

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Registration / Permit ApplicationCompany ID used by Authorized Applicant to Log in via

http://www.mytradelink.gov.my

Select Strategic Trade Act (Act 708)

Enter User ID and Password

Permit Application Key-in information and Submit

Verification of Permit Authorized Licensing Agency(STS/AELB/MCMC/PSD)

Approved (STS/AELB/MCMC/PSD)

Acknowledged by Customs (SMK) and

Notification to applicant

Rejected (STS/AELB/MCMC/PSD)

Notification to applicant

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There is more….This is only a brief overview. You need to familiarise yourself with STA:� read further on the details;� read the FAQs;� get to know the basics of unlisted items i.e. the need for STA permit in

certain cases although your product is not in the List;� note that the Internal Compliance Programme is a pre-requisite for

multiple-use and bulk permits;� be attentive to the requirement of a Special Permit for restricted end-

user countries;� note the conditions for STA permit exemptions;� download the various forms (Form 3, 5 and 6); and� view the slides on STA and export control.Then email admin.sts@miti.gov.my:� make an appointment to meet us and come prepared with questions

specific to your business. We will facilitate your compliance.

You will find it all in our websitewww.miti.gov.my

(Home>Guidelines>Strategic Trade Act 2010)

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� www.miti.gov.my > Guidelines > Strategic Trade Act

� Guideline and Checklist on ICP is provided in the MITI web - STA

� A copy of the Strategic Trade Act 2010, Regulations and Orderscan be purchased from Percetakan Nasional Berhad or is availableupon subscription at http://www.lawnet.com.my/lawnetPublic/

� Feedback and comments on this subject can be sent toadmin.sts@miti.gov.my.

� STS Hotline – 03-6200 0585

� STS - Industry Consultation, every Last Wednesday of the month,10 a.m. to 12 noon in the Strategic Trade Secretariat Office, MITI.

Reference on STA 2010

Thank You