PETALING JAYA: An economist has warned the government that its decision to bar Lynas from importing and processing rare earths after July 1 can affect investor confidence.
Investors could see the decision as indicating a government tendency to break its promises, said Shankaran Nambiar of the Malaysian Institute of Economic Research.
“Lynas claims it was invited to invest in Malaysia with the then government knowing full well the nature of its operations.
“It is now presenting an argument where the government is seen as rescinding its initial agreement,” Nambiar told FMT.
Yesterday, Lynas announced its operating licence in Malaysia has been renewed for three years with no change to the conditions set in 2020 by the Pakatan Harapan government.
These include stipulations preventing the company from importing and processing rare earth concentrates after July 1. Lynas, which has a processing plant in Gebeng, Pahang, will be required to close its cracking and leaching facilities by that date.
Lynas CEO Amanda Lacaze has said the licences given to the company before 2020 did not include the conditions on the importing and processing of rare earths.
Nambiar said the government’s decision would be laudable if there was evidence that Lynas’ operations threatened the lives of surrounding communities. “It is imperative that the government adduce adequate evidence should Lynas take its case to court,” he said.
Yesterday, in a comment on the Lynas issue, Kubang Kerian MP Tuan Ibrahim Man of Perikatan Nasional urged the government to base its decisions on facts and expert opinions.
He said the position taken by certain political parties on selected projects could adversely affect foreign investors.
Geoffrey Williams of the Malaysia University of Science and Technology said the government’s position appeared to be consistent with PH’s policy on standards of safety and on environmental, social and governance issues.
“There is a difference between consistency in contracts and consistency in policy,” he said.
“If there is a change in government, it is expected that policies will change.
“I believe setting new conditions for a renewal of licence is a change of policy and that’s understandable. It would be a different scenario if the conditions were set while a company’s licence was still valid.”
He said Malaysia should not feel sorry about losing investments associated with low safety standards or seen as risky.