The Malaysian Insider – Miti says Lynas decision to be based on facts

By Shannon Teoh

June 20, 2011

Mustapa said business investors will appreciate Malaysia’s objective decision-making. — file pic

KUALA LUMPUR, June 20 — Just 10 days before the results of a crucial review, the Najib administration has assured the public that the fate of the RM700 million rare earth plant in Kuantan will be based on facts and not emotional or political reasons.

Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said although Australian Miner Lynas Corp was given a manufacturing licence to build its plant for economic reasons, “issues of public safety and health, and environment were also” considered.

“Any decision taken will be based on facts, not emotion or political considerations. The International Atomic Energy Agency-appointed (IAEA) expert panel will determine the facts in this case, and the government’s decisions will be guided by its findings and recommendations,” he said in an essay sent to The Malaysian Insider last night.

The United Nations’ nuclear body led a team of international experts to meet stakeholders in Malaysia three weeks ago, after the government bowed to public opposition due to fears of radiation pollution in April and put the project on ice pending a month-long review.

But critics claim the nine-man panel, who will submit its recommendations to Putrajaya by the end of the month, will simply rubber-stamp the government’s decision.

They further claim that as a team of radiological experts, the panel lacked the expertise to look into other aspects of public health and the environment.

In his essay titled “Public safety and business: Getting the priorities right,” Mustapa said Malaysia welcomes foreign investment to help modernise and grow the economy, but would first evaluate the benefits and spin-offs to the economy, such as job creation and technology transfer.

“Not any investment, of course, but the right type of investment,” he wrote.

Lynas has said that its plant — which will extract rare earth metals crucial for high technology products such as smartphones, hybrid cars and wind turbines — will create an RM4 billion multiplier effect annually and will hire 350 skilled workers, 99 per cent of whom will be Malaysian.

Although reports say the plant may earn RM8 billion for Lynas, more than one per cent of the Malaysian GDP, critics have questioned the real economic benefit of the project, pointing to the 12-year tax holiday the Australian company will enjoy due to its pioneer status.

The government estimates investment spinoffs of RM2.3 billion from the plant, including the RM300 million already poured into two factories in the Gebeng industrial zone that will produce hydrochloric and sulphuric acid needed to extract the rare earth metals.

Mustapa added that despite the government calling for the review, investors would still welcome the fact that Malaysia makes its decisions based on facts and reason, and does not act arbitrarily.

“This incident also highlights the need for investors to be responsible corporate citizens in their host country. They should adhere to standards of conduct and governance which are not in any way inferior to those practised in their home country. I think these are legitimate expectations, and no enlightened investor will have any quarrel with them,” he wrote.

He also called on all parties to “refrain from making comments that may pre-judge the panel’s findings” that is due on June 30.

Despite the review process, which has frozen the approval process for two months, Lynas expects no delay to its plans to begin operations in September.

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