SOVEREIGNTY, NATIONAL INTEREST AND SECURITY IN BILATERAL INVESTMENT TREATIES OF MALAYSIA

Mohammad Belayet Hossain,Asmah Laili Yeon,Ahmad Shamsul Abdul Aziz

doi:10.32890/jis2020.16.3

Abstract

At present, the BITs are playing a significant part in regulating foreign direct investment (FDI) in the host countries and like other members of the World Trade Organisation (WTO) Malaysia have also signed BITs to facilitate trade. Malaysia’s FDI laws and BITs mainly protect foreign investors, however, neither of them has any specific provision on the protection of sovereignty, national interest and security. This paper addresses the question, to what extent are sovereignty, national interest and security protected through BITs during entry of FDI into Malaysia? Using non-doctrinal socio-legal research method, the authors critically analyzed 15 BITs to explore whether they protect the sovereignty, national interest and security of Malaysia. The findings show that the existing Malaysian BITs contain provisions to promote and protect foreign investments but lack specific references to protect sovereignty, national interest and security, therefore, the government should consider these important factors when signing future BITs.

Highlights

Bilateral investment treaties (BITs) are a mutual agreement, between two capital importing and exporting countries, that regulate foreign investments in the host country.Mohammad Belayet Hossain, Asmah Laili Yeon & Ahmad Shamsul Abdul AzizThe main objective of BITs is to safeguard foreign investments against nationalisation or expropriation
Apart from the international minimum standard, national treatment can be bestowed to foreign investors, and is defined as a principle where a host country grants favourable treatment to foreign investors that is similar to the treatment extended to domestic investors that are in similar circumstances
The aim of this study is to examine the provisions of BITs that pertains to the protection of sovereignty, national interest and security in Malaysia

Summary

Introduction

Bilateral investment treaties (BITs) are a mutual agreement, between two capital importing and exporting countries, that regulate foreign investments in the host country. The main objective of BITs is to safeguard foreign investments against nationalisation or expropriation. In the event that investments are subjected to nationalisation or expropriation, foreign investors could obtain compensation as per the international minimum standard (Driemeier, 2003). In relation to the individual investments concerned, the negotiators of both countries could determine the terms and conditions of the BITs agreement. There are many BITs that have been signed between the same countries, each treaty have established different terms and conditions that pertains to their investment obligations (Hossain & Rahi, 2019)

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