The Edge Malaysia - 8 July 2025

Malaysian civil society groups urge government to reject investor-state dispute settlement clause in RCEP deal
By Choy Nyen Yiau

On Tuesday, Malaysian civil society organisations (CSOs) joined others in the region to urge the government to keep opposing the inclusion of Investor-State Dispute Settlement (ISDS) in the Regional Comprehensive Economic Partnership (RCEP) deal.

They warned that ISDS lets foreign investors sue governments if new laws or policies affect their profits — even if those laws are meant to protect health, workers or the environment.

Five Malaysian groups — the Consumers’ Association of Penang, Forum Kedaulatan Makanan Malaysia (FKMM), Positive Malaysian Treatment Access & Advocacy Group (MTAAG+), Sahabat Alam Malaysia and the Third World Network — are among 68 organisations across RCEP member countries that have signed a joint letter urging governments not to revisit ISDS provisions in upcoming discussions.

The RCEP, which includes 15 Asia-Pacific countries, came into force for all members in June 2023. Although ISDS was excluded from the final text, member states agreed to begin discussions on the mechanism within two years of the agreement’s enforcement — prompting renewed concern among public interest advocates.

The letter says ISDS cases have more than doubled to 1,401 worldwide, with some ending in billion-dollar payouts that hurt public budgets, especially in developing countries.

It also warns that fossil fuel companies are increasingly using ISDS to fight climate policies, leading some governments to quit ISDS deals because of the harm to their national control and finances.

With the global economy still uncertain, the CSOs say bringing ISDS back into the RCEP would create unnecessary legal and financial risks.

“Given the overwhelming evidence against ISDS and the threats it poses to Malaysian public interest policies, we call on the Malaysian government to exclude ISDS from the RCEP,” said Mohideen Abdul Kader, president of the Consumers’ Association of Penang, in a statement.