By Dr Mohd Safar Hasim
Malaysia risks falling behind in the regional REE (rare earth elements) race. Only federal–state cooperative action can reverse the drift.
In 2014, the Academy of Sciences Malaysia produced a remarkable document: a blueprint for the establishment of rare earth-based industries.
It laid out a roadmap for exploration, processing, downstream industries, and environmental safeguards. It was, in many ways, ahead of its time.
But the blueprint was shelved. Policymakers, wary of public distrust after the Bukit Merah legacy and the Lynas controversy, chose caution over action. The result is what Channel NewsAsia recently called Malaysia’s “lost decade” in rare earth elements (REE).
While Malaysia hesitated, its neighbours moved decisively.
It is worth noting that the academy’s blueprint was published in late 2014, two years after Lynas began operations in Pahang. This means that the document was not a pre-emptive strategy, but a reactive attempt to chart a national course amid growing public scrutiny and geopolitical shifts.
The blueprint offered a way to pivot from controversy to strategy — to turn Lynas into a stepping stone for Malaysia’s own REE ecosystem. But the opportunity was missed. The blueprint was shelved, and Malaysia remained a host, not a player.
ASEAN’s Rare Earth Landscape
Malaysia is not alone in Southeast Asia when it comes to rare earth potential. Three other ASEAN countries — Vietnam, Indonesia, and Myanmar — hold significant reserves, while Thailand has smaller but notable deposits that are beginning to attract attention. Together, these countries account for a sizeable share of global REE resources, yet each is pursuing its own path.
* Vietnam has chosen the route of state-led planning.
* Indonesia is embedding REEs into its resource sovereignty model.
* Myanmar has become a cautionary tale of disorder and dependency.
* Thailand, though less prominent, is positioning itself as a supporting player in the REE supply chain, with reserves estimated at around 13,000 tonnes.
This regional context matters: while ASEAN collectively holds nearly 20% of the world’s REE reserves, there is no common agenda. Each country is moving on its own, shaped by geology, politics, and governance.
Malaysia’s hesitation over the past decade has meant that it is no longer the natural frontrunner in the region.
Vietnam: Planning and Control
Vietnam holds 22 million tonnes of REE reserves, the second largest in the world after China. Unlike Malaysia, Vietnam has treated REEs as a national project.
In 2023, Hanoi approved a Master Plan for Exploration, Exploitation, Processing, and Use of Rare Earths (2023–2030, Vision 2050). The plan bans raw exports, mandates domestic processing, and ties REEs to Vietnam’s energy transition commitments under COP26.
Vietnam’s approach is state-led and disciplined. Provinces follow Hanoi’s directives. Foreign partners — Japan, South Korea, and the EU — are welcomed, but under strict conditions.
The message is clear: Vietnam will not be a quarry for others. It will be a strategic supplier with control over its resources and value chain.
Indonesia: Sovereignty and Integration
Indonesia’s proven REE reserves are smaller — about 300,000 tonnes — but its potential is vast.
REEs occur as byproducts of tin mining in Bangka-Belitung and nickel processing in Sulawesi and Halmahera.
Jakarta has applied its nickel playbook to REEs. In 2025, it created a Mineral Industry Agency to oversee REEs and radioactive materials. Like nickel, raw exports are banned. Investors must build processing plants in Indonesia.
Indonesia frames REEs as part of its resource sovereignty model. They are tied to the defence industry, to EV battery ambitions, and to national pride. By embedding REEs into its industrial strategy, Indonesia ensures that value is captured domestically.
Myanmar: Disorder and Dependency
Myanmar is the cautionary tale. It is estimated to supply up to 40% of the world’s heavy REEs (HREEs), especially dysprosium and terbium. These are mined in Kachin State, much of it under the control of the Kachin Independence Organisation and other armed groups.
Since the 2021 coup, Myanmar has exported over US$3.6 billion worth of REEs to China. China,which processes 90% of global REEs, relies on Myanmar for more than half of its heavy REE imports.
But Myanmar’s REE industry is unregulated, environmentally destructive, and tied to conflict financing. Revenues flow to armed groups and the junta, not to national development. Myanmar is effectively a resource appendage of China — rich in geology, poor in governance.
Malaysia: At a Crossroads
Malaysia has 16.2 million tonnes of REE reserves, worth an estimated US$175 billion. It also hosts Lynas in Pahang, which processes 12–15% of global REEs. On paper, Malaysia should be a leader.
But the reality is sobering:
* No national master plan.
* Fragmented governance, with all four major REE states — Terengganu, Kelantan, Kedah, and Perlis — under opposition governments.
*A deep public trust deficit, rooted in the Bukit Merah disaster and the Lynas controversy.
* Over-reliance on Lynas, which processes Australian ore rather than Malaysia’s own deposits.
The risk is clear: if Malaysia does not act substantively, it risks joining Myanmar’s path — resource-rich but policy-poor, a supplier without sovereignty.
What Malaysia Must Do Now
The next decade must be different. Malaysia cannot afford another lost decade. Here is a cooperative roadmap:
1. Establish a National–State REE Council
Equal representation from federal and state governments. Joint decision-making on licensing, environmental standards, and foreign partnerships. Prevents fragmentation and builds trust across political divides.
2. Launch a Master Plan (2026–2040)
Clear targets for exploration, processing, and downstream industries. Integration with the National Energy Transition Roadmap and semiconductor strategy. A vision that links REEs to Malaysia’s green economy and industrial upgrading.
3. Revenue + Responsibility Sharing
States receive royalties and development funds. Federal government co-invests in infrastructure, training, and green industries in host states. Ensures both sides benefit, reducing zero-sum politics.
4. Ban Raw Exports, Incentivise Downstream
Follow Vietnam and Indonesia: no raw REE exports. Tax incentives for magnet plants, EV motor assembly, and chip packaging. Tie mining licenses to local value-add commitments.
5. Build Public Trust
Transparent audits, independent monitoring, and community participation. Prioritise non-radioactive REEs to avoid Lynas-style backlash. Communicate benefits in terms of jobs, green tech, and sovereignty.
6. Strategic Partnerships
Position Malaysia as a neutral hub between China and the West. Partner with Japan, Korea, and the EU for clean extraction technologies. Explore selective ASEAN cooperation, while recognising that each country will pursue its own path.
Conclusion: Choosing the Next Decade
Malaysia’s “lost decade” is a reminder that knowledge without action is wasted leverage. Vietnam acted with planning. Indonesia acted with sovereignty. Myanmar acted without governance — and became dependent.
Malaysia now has a choice. It can:
* Follow Vietnam’s path of planning and control.
* Follow Indonesia’s path of sovereignty and integration.
* Or risk drifting into Myanmar’s path — where REEs enrich others, fuel conflict, and leave the nation behind.
The next decade must be one of cooperation, clarity, and courage. Federal and state governments must work together, guided by expertise and public trust. Malaysia cannot afford to be just a host for foreign processors. It must become a strategic player in its own right.
The Academy of Sciences blueprint from 2014 showed what was possible. A decade was lost. The next decade must not be.
The views expressed here are entirely those of Dr Mohd Safar Hasim, a Council Member of the Malaysian Press Institute