Malaysia: Guardians Of The (Bio-Resources) Galaxy

Last Updated: 29 May 2018
Article by Charmayne Ong Poh Yin and Gooi Yang Shuh

Over two decades ago, a group of nations banded together to protect the Earth's bio-resources by signing the Convention on Biological Diversity ("Convention"), followed by the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits arising from their Utilization.

Malaysia became a signatory to the Convention in 1992 and recently enacted the Access to Biological Resources and Benefit Sharing Act 2017 ("Act"), which was gazetted on 17 October 2017. According to the Ministry of Natural Resources and Environment ("Ministry"), the Act will only come into force after subsidiary legislation to the Act is drafted and gazetted in the first quarter of 2018.

In a nutshell, the Act seeks to act as a guardian to Malaysia's rich biodiversity by regulating access to bio-resources and associated traditional knowledge as well as the sharing of benefits arising from the use of these resources. Historically, corporations and researchers would learn of the medicinal or health benefits of various local bio-resources from the indigenous or native communities, then appropriate and exploit the bio-resources, without financial compensation to the State or indigenous communities. However, careful scrutiny of the wording of its provisions reveals that the powers conferred under the Act may be far more wide-reaching than intended.

KEY PROVISIONS OF THE ACT

The Act requires any person who intends to access a biological resource or traditional knowledge associated with a biological resource to apply for a permit.

"Biological resource" is defined to include genetic resources, organisms, microorganisms, derivatives and any parts thereof; the populations and any other biotic component of an ecosystem with actual or potential use or value for humanity; and any information relating to the foregoing (Section 4).

As for what constitutes "access", the Act provides that a person is said to have access to a biological resource if the taking of a biological resource from its natural habitat or place where it is kept, grown or found, is for the purpose of research and development or if there is a reasonable prospect that a biological resource will be subject to research and development (Section 5).

Right off the bat, it must be emphasised that the potential ramifications of such wide definitions cannot be overstated. Take, for example, lemongrass – a commonplace plant found throughout Malaysia. If the Act is interpreted strictly, even food and beverage manufacturers that research into, develop and commercialise lemongrass plants harvested in Malaysia into simple food products may be required to apply for a permit.

Permit for Commercial Purposes / Non-commercial Purposes

There are two types of permits under the Act: one for commercial or potential commercial purposes (Section 12); and one for noncommercial purposes only (Section 13).

Both permits are to be applied from, and issued by, the relevant Competent Authority which are the statutory bodies specified in the First Schedule of the Act, with one Competent Authority designated for each State and a National Competent Authority overseeing the general implementation of the Act. Many practical questions come to mind when reviewing the Act and the provisions on applying for permits.

The Act does not deal with the situation where a bio-resource is located in and the access spans several States. Would a single permit from one Competent Authority suffice or are separate permits from each Competent Authority needed, depending on where access takes place?

The Act also provides that the Competent Authority may approve the application and issue a permit, with or without condition, if the criteria set out in Section 12(2) (for permits for commercial purposes) or Section 15(3) (for permits for non-commercial purposes) are satisfied.

Save that applications for permits for commercial purposes require a benefit sharing agreement ("BSA") to be established, both sets of criteria under Section 12(2) and Section 15(3) are largely identical and rather lengthy, including, inter alia, that an applicant must obtain prior informed consent.

The extent to which the fulfilment of these criteria must be proven remains to be seen. For instance, one criteria is that the access "may not result in adverse environmental impact". Does this necessitate an environmental impact assessment to be conducted? If so, an application would be very laborious and cost-intensive.

Prior Informed Consent and Benefit Sharing Agreement

Prior informed consent of the relevant indigenous community must be obtained for access to a bio-resource on land to which they have a right and to associated traditional knowledge held by them (Section 23(1)).

BSAs are to be entered into with the "resource provider" (Section 22(1)), which is defined to include, inter alia, the Federal Government or State Authority possessing bio-resources in insitu conditions; and the indigenous and local communities where the resource is on land to which they have a right or where they are the holders of the traditional knowledge.

A BSA is to be based on "mutually agreed terms and provide for fair and equitable benefit sharing" (Section 22(2)). However, there is no guidance on what would amount to "fair and equitable". One can already foresee the skirmishes that could be had in court as to how this is to be measured.

The effectiveness of "mutually agreed terms" is questionable as well. Inequality of bargaining power aside, it is not difficult to envisage a scenario whereby an indigenous community fails to appreciate the commercial value of a particular bio-resource and signs an unfavourable deal.

Identifying the local or indigenous communities

Section 23(4) provides that any prior informed consent shall be obtained from, and a BSA entered into with, the representative, organisation or body identified in accordance with the customary laws and practices, protocols and procedures of the indigenous and local community.

Where no such representative or organisation can be identified, consent is to be obtained from, and a BSA entered into with, the holders of the traditional knowledge within the communities; or the Federal Government or State Authority, if the holders of the traditional knowledge cannot be identified (Section 23(4)(b)).

As for situations where the same traditional knowledge is shared by more than one indigenous or local community, consent must be obtained from, and a BSA entered into with, the duly identified representative or organisation of all the holders of the traditional knowledge; or, where it is not practicable to ascertain all such holders, all such representatives or organisations as the applicant is able to ascertain (Section 23(6)).

The task of identifying the right representative(s) or community(ies) may be a challenging and costly exercise, especially in cases where a group of researchers independently discovers a bioresource and its use without assistance from any particular indigenous community.

Offences

Failure to comply with the provisions of the Act should not be taken lightly and would result in rather severe sanctions.

Any person who accesses a bio-resource or traditional knowledge for commercial purposes without a permit will be liable to, in the case of an individual, a maximum fine of RM500,000 or imprisonment for a maximum term of 10 years or both; and in the case of a body corporate, a maximum fine of RM5,000,000 (Section 12(6)).

Where the access without a permit is for non-commercial purposes, an individual will be liable to a maximum fine of RM100,000 or imprisonment for a maximum term of seven years or both; whereas a body corporate will be liable to a maximum fine of RM1,000,000 (Section 15(7)).

EFFECT ON PATENTS

Notwithstanding the impact on researchers and corporations generally, the Act has a number of provisions which would affect patent holders specifically.

The National Competent Authority is tasked under the Act to establish measures for the purpose of monitoring and tracking bio-resources or traditional knowledge, including the designation of checkpoints where permits must be produced. Crucially, such checkpoints include offices or authorities dealing with applications for patents, i.e. MyIPO.

Based on general enquiries with the Ministry, MyIPO would inform the Ministry of any patent application which involves a bio-resource or traditional knowledge, and the Ministry would then investigate its source of origin. However, it remains to be seen how effective such a checkpoint system would be.

Further, any person applying for a patent in relation to a bioresource or traditional knowledge accessed is required to notify the National Competent Authority in writing within 30 days from the date of the application (Section 31(1)). Failure to do so amounts to an offence.

To view the article please click here.

Originally published in Issue 4/2017 of Legal Insights

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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