US Sanctions Malaysian Chip Firm Over Alleged Russia Military Aid

News Asia 360
ByNews Asia 360

Key Takeaways:

  • Jatronics is suspected of shipping crucial parts for missiles, jets, and drones.
  • This incident follows similar US sanctions on Malaysian companies last year accused of aiding Iran’s weapons program
  • Malaysia’s aim to be a neutral hub in the semiconductor industry might be risky.
  • Jatronics is a trading company, not a semiconductor manufacturer, according to Malaysia’s Ministry of Investment, Trade and Industry (MITI).

The United States has taken a strong stance against a Malaysian company, Jatronics Sdn Bhd, accusing it of aiding Russia’s military działania wojenne (war efforts) in Ukraine.

Jatronics is one of hundreds of entities facing US sanctions for allegedly supplying Russia with essential electronic components for military equipment. Jatronics, a Kuala Lumpur-based firm, is suspected of shipping critical parts that could be used in Russian missiles, jets, and drones

While the US hasn’t confirmed if these components were directly used in military technology, they acknowledge that Jatronics provided items on a US list of crucial materials for Russian precision-guided weapons.

The sanctions severely restrict Jatronics’s financial activities. Any US assets belonging to the company are frozen, and they are barred from business dealings with US-allied nations. This effectively cuts them off from a major financial system.

Independent reports indicate that Jatronics shipped millions of dollars worth of goods to Russia between 2022 and 2023, with some recipients already facing sanctions for ties to the Russian military.

This incident comes on the heels of similar US sanctions against Malaysian companies last year, which were accused of supplying components for Iran’s weapons program.

Malaysia has recently attempted to position itself as a neutral player in the global semiconductor industry, hoping to attract significant investments. However, experts warn that this neutrality strategy could backfire and expose Malaysian firms to further sanctions, especially as the US tightens its grip on Russia’s supply chains.

A professor at National War College in Washington, Zachary Abuza told Al Jazeera, “They are setting them up to be sanctioned. Malaysia is clearly under watch from the US right now”.

Malaysia Clarifies Jatronics Role, Emphasizes Neutrality

The Malaysian Ministry of Investment, Trade and Industry (MITI) has clarified the role of Jatronics Sdn Bhd.

Contrary to initial reports, MITI confirms Jatronics is not a semiconductor manufacturer, but rather a trading company that deals in wholesale semiconductor products and related services.

This distinction is important because Malaysia has a regulatory framework, the Strategic Trade Act (STA) 2010, that governs the export of strategic items with potential military applications. MITI emphasizes that Jatronics is not registered under this act and hasn’t applied for export permits.

MITI reiterates Malaysia’s adherence to multilateral sanctions and the United Nations Security Council (UNSCR) restrictions. Since Russia is not currently on the UNSCR list, it doesn’t fall under Malaysia’s export control measures.

This clarification follows the US imposing sanctions on Jatronics for allegedly supplying electronic components to the Russian military.

The Ministry advises Malaysian companies to stay updated on sanctions imposed by other nations, particularly the US, and be vigilant about trade restrictions. They also revealed ongoing discussions with the US embassy regarding these sanctions.

MITI emphasizes its commitment to engaging with key trading partners to address concerns, maintain Malaysia’s neutral stance in the conflict, and promote a secure global trade environment.

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