Member of Parliament for Ipoh Timor Howard Lee Chuan How, who also chairs the Parliamentary Caucus for Critical Minerals, gives his take on the deal between the United States and Malaysia, especially on clauses related to rare earth elements (REE) mining. He has also attempted to answer some of the concerns raised on the impact of the deal to Malaysia. His statement has been published in its entirety.
Trump came, did his dance and signed the papers that we needed him to; and he got his extractable too with the KL Peace Accord that we delivered. But all abuzz -at least among those observant of critical minerals developments in Malaysia anyways- isn’t just the Executive Orders (EO) dictated Trade Agreement as a whole, but the critical minerals vis a vis the rare earth elements (REE) part of it.
Under the Article 5.2 (3) on Export Controls of the Agreement that Trump and our Prime Minster signed, “Malaysia shall explore the establishment of a mechanism to review inbound investment for national security risks, including in connection with critical minerals and critical infrastructure, consistent with widely accepted international best practices,…”. This looks and sounds like the previously shelved Minerals Security Partnership.
Article 6.1(1).under Investment “Malaysia shall, in accordance with its laws and regulations, facilitate and promote investment by the United States in sectors including critical minerals” among other sectors.
In the USTR Factsheet, I must lay down the exact text:
Opening Doors for Critical Minerals and Rare Earths Partnerships: Malaysia has committed to the expedient development of its critical minerals and rare earths sectors in partnership with U.S. companies, including by: (1) refraining from banning, or imposing quotas on, exports to the United States of critical minerals or rare earths elements; (2) granting extended operating licenses so that businesses have the certainty to increase production capacity; and (3) ensuring that no restrictions are imposed on the sale of rare earth magnets to U.S. companies.
The central question that is boomeranging all over parliament and whatsapp groups is: What are the implications for Malaysia? We, members of the Parliamentary critical minerals caucus and Parliament’s special select committee members for Foreign Affairs and international trade are not ‘read-in’ on the actual deal, let alone party to the negotiations; but we have definitely made our thoughts heard. But here I will offer my take since it’s been aggressively canvassed for over the last 48 hours.
If all goes according to plan and if we execute this moment with precision and patience we can rightly say that Malaysia has prised open the second door to the Age of Magnets and Microchips. The US gets supply certainty; Malaysia gains the certainty of demand, licensing tenure, and long-term investment.
This is the very opposite of a “dig-and-ship” story. It is a chance to build a full mine-to-magnet-to-market ecosystem on Malaysian soil. The USTR fact sheet’s language of “no bans, no quotas, no limits on sales to the US” is favourable, because it speaks to finished products, not raw ore. That subtlety matters. Today, Malaysia’s current capacity lies at the earliest stage of the value chain ie. ion-adsorption clays and leaching operations, far from the oxides, metals, and magnets that define high-value downstream industries.
Yet therein lies the promise: this MoU creates space for Malaysia to climb the value ladder, to attract the technology transfers we need, from China, Australia, or even the US itself. It is an invitation to move from the mud to the magnet; provided we act with vision, not haste.
If we execute well, this will not just be an agreement — it will be the realisation of an entire value chain.
Another popular question is whether or not ‘this’ will affect Malaysia’s relationship with China?
Of course not. Neutrality is our policy, not our apology. Anything involving critical minerals is inherently geopolitical but Malaysia’s guiding star remains active neutrality and ASEAN centrality. And this global tussle and contestation for critical materials isn’t a schoolyard prom night love triangle story on Tiktok; China isn’t going to ‘get jealous’ if Malaysia added US as another partner in accordance to our needs and our laws.
We can sell magnets to Detroit, Seoul and Tokyo and co-develop separation tech in Beijing and Shenzhen. The world’s interest- and China’s too- lies in diversifying partnerships and de-risking single-source dependencies. China understands leverage; so do we. Active neutrality is not a tightrope we walk. It is the bridge we build. By anchoring one line with US buyers and another with Asian partners, Malaysia reduces single-point coercion and raises its bargaining power with all sides.
Are there other regional geopolitical implications? Absolutely. This is not just about Malaysia; it’s about the temperature of the world’s supply chains. A Malaysian hub that can refine and sell to multiple blocs becomes a pressure (releasing) valve for global competition, not a pawn in it.
ASEAN gains a stabiliser and builds a middle path between rivalry and resilience. In critical minerals, clarity is currency. Ambiguous regimes and uncertain landscapes lose investors; clear, rules-based frameworks attract them. By locking in access for one superpower while keeping the door open for others, Malaysia becomes the non-aligned node global manufacturers can plan around.
When supply chains punish ambiguity and reward clarity, Malaysia’s best strategy is to be the world’s plan A — and never anyone’s fallback.”
What effects will this have on PAS-controlled states and Sabah who all have massive critical minerals potentials?
Let’s be clear: this is a Malaysian agenda, not a partisan one. What lies beneath our soil must serve all Malaysians, equitably, fairly, holistically and sustainably. The goal is not to divide by political boundaries but to align by national interests and purpose.
States with (or claim to have) deposits — Perak, Kedah, Kelantan, Pahang Terengganu, Sabah— must see better returns than they do today. That is why I have long advocated for a national aggregator — MiStraNas, the Mineral Strategic National entity. It does not strip states of their constitutional rights. Instead, it helps them negotiate better deals, ensuring Malaysia speaks to the world as one economic bloc, not as individual small voices competing for crumbs. Without coordination, it’s a race to the bottom. With aggregation, it’s a united national march as a larger force toward national leverage.
The PAS belt, Sabah’s future lies not in another mining rush, but in downstream value and logistics excellence — turning ports like Sandakan and Kota Kinabalu into magnets for component manufacturing and recycling plants. It is also a national imperative that Kerian in Madani Perak, Kulim in PAS run Kedah, and Batu Kawan in Penang long held by PH all work concertedly and benefit together from this Mine to Magnet & Microchip economic and technological quantum leap.
Is this a good or bad deal for Malaysia? Why?
It is a good deal — if we treat it as a floor, not a ceiling.
The 19% reciprocal tariff world is tolerable when the magnets and motors are made here. Punitive only if we remain raw-material exporters.
We haven’t traded away sovereignty or options — only opened a new window of opportunity. The “no bans, no quotas” clause doesn’t make us anyone’s exclusive partner. It keeps our domestic ban on raw exports intact, while unlocking pathways to collaborate with the US, Japan, Korea, and yes, China, where it serves Malaysia’s interest. We traded optionality for opportunity, not sovereignty.
This agreement is a demand guarantee, not a development plan. The plan – the how, the where, the who — is entirely up to us.
What about environmental consequences?
This is where Malaysia must lead by example. No ESG, no industry. Either we run the world’s cleanest ion-adsorption clay operations, using drones and satellite imaging, waste vitrification, strict water baselines, and the best available tech or we deserve to be shut down.
MiStraNas is not just a buyer of first resort. It is the mechanism through which we enforce social and environmental discipline. Communities must see clinics, roads, scholarships, and R&D before they see stockpiles. We must earn the social licence before we extract a single gram. We must not only mine the earth – we must honour it.”
Malaysia’s advantage is not just what lies beneath our soil, but the wisdom to ensure it enriches the people above it.
The agreement signed during Trump’s visit marks more than a trade line; it is the start of a new geopolitical grammar where Malaysia writes a full sentence — not as a quarry to the world, but as a factory and R&D hub to the future.
Our task now is simple, but not easy: diversify partners, domesticate value, de-risk geopolitics. If we can build that bridge between earth and equity, then perhaps, for once, the world will come to Malaysia not for what we have — but for what we know how to make.
–WE