• Malaysia enforces trade permits for all high-performance AI chips from the US.
• The new regulations aim to prevent illicit technology transfers to China.
• US tariffs on Malaysian exports have raised concerns over economic impacts.

In response to increasing pressure from the United States, Malaysia has imposed immediate restrictions on the export, transshipment, and transit of high-performance artificial intelligence (AI) chips originating from the US. This requires a Strategic Trade Permit for all involved transactions, effective immediately, as stated by the Ministry of Investment, Trade and Industry (MITI) according to SCMP and AA.

The newly enacted regulations are intended to plug potential loopholes in Malaysian law that might allow for the diversion of sensitive technology to other countries, especially China. Previously, there had been concerns that advanced AI chips, particularly from Nvidia, might reach Chinese companies through Malaysia, prompting stringent oversight measures, according to India Times.

Recently, Malaysia faced significant sanctions from the US, with a proposed 25% tariff on exports starting August 1. The country is under pressure to demonstrate compliance with international trade obligations while mitigating potential economic repercussions from these tariffs. Trade Minister Tengku Zafrul Aziz emphasized the need to "prevent the misuse of divergent, sensitive technology, such as AI chips," during a press conference, as mentioned in reports from SCMP and AA.

Despite stringent measures, Malaysia has not yet found evidence of illicit AI chip trading, leading its authorities to seek collaboration from US counterparts to investigate. The government is committed to maintaining a transparent and rules-based trading environment, which includes taking strict action against any entities that violate the Strategic Trade Act, according to India Times and SCMP.