Comment & analysis

Government outreach to industry: experiences from Malaysia and South Korea on preventing the trade of weapons and dangerous goods

22 January 2019 Datin Mega Marissa Malek and Kyung-Lyung Lee

A recent series of meetings in Vienna and London brought together experts from around the world to discuss their experiences of preventing the diversion or trade of weapons and other dangerous goods, and also explored ways for governments to reach out to industry to help ensure compliance. We spoke with Datin Mega Marissa Malek and Kyung-Lyung Lee to hear their thoughts.

Please tell us a bit about yourself and your background.

Mega: My name is Mega Marissa – I’m the principal assistant director at the Strategic Trade Secretariat, which is based under the Ministry of International Trade of Malaysia. The secretariat acts as the governing body of strategic trade controls in Malaysia. We act as licensing officer, coordinator, policy implementer and also the enforcer of the Strategic Trade Act of Malaysia.

Kyung-Lyung: My name is Kyung-Lyung Lee, from South Korea, and I work for an organisation called Korean Security Agency of Trade and Industry (KOSTI). Founded in 2007, we focus on control of dual-use items [those that can be used for both civilian and military purposes] and we support the government and industry around implementation.

Why is it important to prevent the diversion or illegal trade of weapons or dual-use goods?

Mega: In 2009, Malaysia became famous for the wrong reasons. At the time, a trader was involved in supplying dual-use goods in making a nuclear weapon. Learning the lessons from that experience, we then created the Strategic Trade Act. Since then, we’ve dealt with cases where Malaysia has become a transhipment hub for illicit traders. We don’t want to be involved in the development of weapons of mass destruction or in their delivery. We want investors to have confidence in our country.

What are some of the challenges that governments and industry face in preventing the diversion of goods and weapons for illicit purposes?

Mega: As an example, one of the challenges we face is disputes around dual-use items. For multinational corporations, they are involved with many export controllers in lots of countries. So when we present a case of a controlled item, they might say that in another country it’s not considered a controlled item even though the company resides in Malaysia and the product passes through Malaysia. So those types of disputes do happen, especially relating to dual-use items, in terms of pinpointing whether an item is controlled or not.

The second challenge is reaching out to companies that are under the radar. They might not be aware that what they are handling are dual-use goods, because there’s a lot of trading and transhipment happening in Malaysia all the time. These types of companies are often the target of proliferators because they may not know about the product or the rules. And in Malaysia, we don’t have a commerical association that specifically handles export controls. This is why industrial associations are useful – because they are more coordinated and allow for more effective outreach.

Kyung-Lyung: I think the most challenging part of strategic trade controls is that not many people know how important it is. Most of the government departments in charge of strategic trade controls are also focusing a lot of attention on the promotion of trade and economic development. For them, the priority is more on promoting trade, not controlling it. For a government like South Korea’s, we are a mid-range country that depends heavily on trade with other countries to boost our economy. And right now we are going through a sort of economic depression, so it is especially difficult at the moment to implement controls on strategic trade control items for companies that just want to promote more trade.

I think another challenge is the consistency of government policy on the strategic trade control programme. Sometimes government officials will talk about how important it is for national security, but then when there’s an economic crisis of some kind, this goes out the window. Then later, they may bring it up again, but this strategy doesn’t work very well because it’s inconsistent.

There have also been a number of recent issues that have arisen in Korea. For example, intangible transfers of technology and technology control present new challenges. There is a cultural issue in Korea where intellectual property is not seen as a priority. Because of this and the economic situation I mentioned earlier, it is especially difficult to tell companies to invest in controls for their technologies.

How can governments and industry better cooperate with each other to prevent illicit trade?

Mega: The fundamental thing is the need to work together. The government needs to understand what industry wants. We cannot impose things – rules or regulations – that are not relevant to industry. At the same time, we need to make them understand why there are such rules. They’re our clients – we have to make our outreach clear and relevant. We cannot create something that is completely uniform across sectors, because we are dealing with many different levels of companies – different sizes and different types of products. There are multinationals, but there are also small and medium-sized enterprises. We could give rules or guidelines in general, but it’s more working one by one with specific industries in learning what they want, and trying to work towards their needs within the framework of the Strategic Trade Act.

Kyung-Lyung: I think consistency of policies is really important for the government as well as companies. Because companies have long-term interests, they want a stable regulatory environment. So if you want to persuade these companies to have their own internal compliance programmes on technology, then they will need to be sure that this environment will stay the same for ten years or more. Otherwise they’re not going to start to invest in these compliance measures because the regulatory environment is unstable. Especially for small companies, they have to look to long-term resources and investments. So I think while countries must be very strict with strategic trade controls, they must present these requirements in a clear way and make sure that they won’t change for a long time.

What are some practical ways governments and industry can work together?

Mega: There are regular events and outreach programmes where we collaborate with international bodies. We also do domestic outreach. Regularly we have a ‘clients’ day’, and we have a special email address where industry can send their questions. We also have an open-door policy or people can give us a call or come in for one-on-one consultation. We do publish a lot of information on our website as well. Some companies request specific outreach for their company – so we discuss with them and cater to their needs and requirements.

The idea [of a toolkit to help with industry outreach] is really good, but the challenge is pleasing everyone and creating something that will be useful for all. How I see it is that this toolkit could be used by the private sector or the public sector. And for Malaysia, the Strategic Secretariat is very centralised when we do our outreach – so with the help of the toolkit we could delegate this to our licensing partners and enforcement agencies. Like a training of trainers, where we have a module that is standardised.

Kyung-Lyung: I found through the Saferworld meetings from this week and last week that communication is key for many different countries. There needs to be more communication between ministries within the government – they should find some common ground and agree on major points before communicating widely with industry. This communication should be clear and efficient, and must also be on a regular basis – not just a one-time event, but longer workshops where participants have time to discuss issues in depth. And they should also have time to talk through potential solutions.

Currently, the system works in a way where we have specific contacts within industry who really care about internal compliance programmes and strategic trade controls, and we meet with them regularly. But it’s not ideal, because they are often from large companies that have plenty of resources. I think it would be better to meet with a wide range of companies of different sizes, but not many governments are able to do this on a regular basis – it’s a challenge.

What has been the most interesting part of attending meetings with international colleagues, like the ones just held in London and Vienna?

Mega: I’ve found that guidelines for internal compliance programmes differ from country to country. In Malaysia we have five elements, but for example in Pakistan they have more. Hearing about these other elements can help us refine our own programmes.

Second, in terms of the global supply chain, engagement needs to be throughout the supply chain, not just to the direct supplier. And third, the importance of trade associations in export control.

I will take these lessons back to share with my colleagues in Malaysia.

Kyung-Lyung: I was surprised that many countries have the same problems we have in South Korea, even countries I thought of as being very different. But we share the same problems. So it’s really nice to have experts from around the world come together and address these issues together. There should be more of this, too – it shouldn’t be the end of the discussion, since there are a lot of things we can discuss more to get concrete solutions.

I’ve really enjoyed taking part in the different meetings and discussions. They help me a lot, and make me feel like I’m part of a team.

Photo: Flickr/Jdmoar