Malaysia is sitting on an estimated 16.1 million tons of rare earths — but roughly 70% of it lies inside permanent forest reserves, and the country’s own governance is getting in the way of touching the rest. In this episode, Dr. Tricia Yeoh, Director of the Asian Institute for Policy and Engagement at the University of Nottingham Malaysia, joins Dustin Olsen and Daniel O’Connor to unpack her ISEAS paper, Ambition Without Alignment: Managing Malaysia’s Rare Earth Value Chain. Her core argument: Malaysia’s ambition has outrun the institutions meant to deliver it.
Governance, Not Geology, Is the Bottleneck
Malaysia is a highly centralized federation, but land, mining licenses, and royalties sit with its thirteen states, while exports, security, and national policy sit with the federal government. For decades, those two levels moved together under a dominant party. Today, state and federal coalitions increasingly diverge, and states are asserting their rights far more forcefully.
- States control: land, mining licenses, exploration permits, and royalty rates.
- The federal government controls: import/export licenses, radioactive-material safety, and national policy.
- The disjoint: foreign governments now negotiate directly with state chief ministers, sometimes without federal knowledge.
The Three Policy Bottlenecks
- Federal-state coordination: countries from France to Japan, Korea, Belgium, and Australia negotiate state by state, while rare earth deposits cross state borders and royalty rates diverge.
- Protected land: an estimated 70% of Malaysia’s 16.1 million tons sits inside permanent forest reserves, and de-gazetting them is legally and politically fraught.
- The raw export ban: banning raw rare earth exports protects downstream value but deters upstream explorers who face high upfront costs and can’t yet export what they find.
The Missing Institution
Malaysia has only three official federal-state platforms — the National Finance Council, the National Land Council, and the National Council on Local Government — and none is built for something as central as rare earth. Yeoh argues for a dedicated, empowered national rare earth office with a real mandate to coordinate and to negotiate with international partners in the language of geopolitics and geoeconomics, not just a bureaucratic minerals department covering everything at once.
Caught Between the US and China
On the pressure to choose sides in the US-China trade war, Yeoh is blunt: the right answer is both. Southeast Asia’s supply chains are deeply integrated with China, while the US and Europe remain vital export markets. Malaysia’s play is to hedge — and to normalize planning amid permanent political uncertainty rather than waiting for the stars to align.
Key Takeaways
- An estimated 70% of Malaysia’s rare earths are locked inside protected forest reserves.
- Land and royalties sit with states; exports and security sit with the federal government — and the two are no longer aligned.
- The raw-rare-earth export ban protects value but can stall upstream exploration.
- Malaysia needs a dedicated national rare earth office, not another five-year plan in a drawer.
- Enforcement and environmental history — including the Bukit Merah incident — make credible regulation essential.
FAQs
How much rare earth does Malaysia have?
Malaysia has an estimated 16.1 million tons of recorded rare earth deposits, but roughly 70% sits within permanent forest reserves, limiting how much can realistically be developed without controversial de-gazetting of protected land.
Why is Malaysia's rare earth industry stalling?
Dr. Tricia Yeoh argues the bottleneck is governance, not geology. States control land, licenses, and royalties while the federal government controls exports and security, and as their political coalitions diverge, the two levels are no longer aligned enough to build a coordinated national value chain.
Who controls rare earth mining in Malaysia?
Both levels, in split roles. States control land, mining licenses, and royalty rates. The federal government controls import and export licenses, radioactive material safety, and national policy.
What is Malaysia's raw rare earth export ban?
Malaysia bans the export of raw, unprocessed rare earth to push value-added processing onshore. It can protect long-term value, but it also deters upstream explorers who face high upfront costs and cannot yet export what they find.
What does Tricia Yeoh recommend Malaysia do?
She calls for a dedicated, empowered national rare earth office or council with a clear mandate to coordinate federal and state interests, negotiate with international partners, and adapt quickly amid political uncertainty.
Transcript
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Dustin Olsen (00:40)
Hey everyone, welcome to the Rare Earth Exchanges Podcast. I’m your host, Dustin, joined by my co-host Daniel, and our guest today is Tricia Yeoh, Director of the Asian Institute for Policy and Engagement at the University of Nottingham Malaysia. Tricia, welcome to the show.
Tricia Yeoh (01:35)
The main thing I do at the School of Politics, International Relations and Economics is teach comparative politics and political economy. My own research covers Malaysia — federalism, federal-state relations, the policy ecosystem — and with my public policy background, having headed a national think tank, I sit at the intersection of the political and the political-economy side. Today we’re looking at rare earth, because I have a good feel for what’s happening on the ground in Malaysia.
Tricia Yeoh (03:26)
The thesis of Ambition Without Alignment is that Malaysia has huge ambitions of developing the rare earth value chain — upstream to midstream to downstream. But several policy bottlenecks are hampering or restricting that. Unless they’re addressed with sheer determination and policy coordination, I’m not sure we’d develop that midstream and downstream sector in the next few years.
Tricia Yeoh (06:46)
Malaysia is a highly centralized federation. Despite having thirteen states, most high-level policy is dictated federally. But land, natural resources, religion, and local government are controlled by states. Because rare earth involves land, states control land mining, exploration licenses, mining contracts, and royalties. The federal government controls import and export licenses, the safety of radioactive material, and national policy. When federal and state governments were aligned under one dominant party, that was easy. Now there’s significant political fragmentation, and states are asserting their rights far more forcefully.
Tricia Yeoh (11:24)
The top three challenges: First, federal-state coordination — countries as wide-ranging as France, Belgium, Japan, Korea, and Australia are negotiating with states’ chief ministers directly, without necessarily the federal government’s knowledge. The rare earth isn’t confined to one state. Second, Malaysia has up to 16.1 million tons of rare earth, but 70% remains within permanent forest reserves, and de-gazetting them is controversial. Third, the ban on exporting raw rare earth — while there’s interest from industry like the French company Carester wanting to build a separation plant in Lacq, the ban makes it hard for upstream explorers to see the incentives to enter the market.
Tricia Yeoh (17:10)
There are only three official platforms where federal and state governments come together: the National Finance Council, the National Land Council, and the National Council on Local Government. None is built for something as central as rare earth. One would propose a national office of rare earth, because you have ambitious goals but no corresponding institutional setup. The Department of Minerals and Geosciences covers all minerals and is a bureaucratic agency without the empowerment to negotiate with international partners in the language of geopolitics and geoeconomics.
Tricia Yeoh (21:30)
Southeast Asia has a tremendous opportunity but feels forced to take a side. If you had to pick between the US and China, the right answer is both — for decades our supply chains have integrated with China while the US and Europe remain vital export markets. Malaysia has done well being a partner to all sides, and we’d want to hedge our bets amid this great-power competition. On our neighbors, I can’t say any one has got it entirely right yet; the lesson from Myanmar is that domestic conflict can damage national economic ambitions.
Tricia Yeoh (27:08)
The risk is that the domestic political and electoral cycle hampers policy continuity. We need to normalize planning amid instability rather than waiting for the dust to settle. The days of waiting for the stars to align completely in order to make plans — that’s pretty much over. We need to deal with things in a shorter life cycle while planning for something as complex as the rare earth industry.
Tricia Yeoh (33:34)
One final thing: policy implementation and regulation need to be done very well, because of the environmental impact. People will remember the incident at Bukit Merah, where the consequences of rare earth mining were severe for the community. With illegal mining also present, enforcement is critical — and again, federal and state enforcement agencies need to coordinate and work together.
