Japanese business outlook in Malaysia sees improvement

According to a survey by JACTIM, this is due to Malaysia’s high GDP growth rate this year


Japanese companies in Malaysia have a renewed confidence and optimistic outlook for the first time in three years, based on a survey by the Japanese Chamber of Trade and Industry Malaysia (JACTIM).

Its Diffusion Index, which measures the confidence level among 546 JACTIM member companies, soared to 2.1 points in the second half of this year (2H17), from the -8.8 points recorded in the first six months of 2017.

Japan External Trade Organisation Kuala Lumpur MD Akira Kajita said the return of confidence among Japanese investors and firms is attributable to Malaysia’s high level of gross domestic product (GDP) growth rate this year.

“The overall economy in Malaysia has been good. I can especially observe a significantly improved condition in the electrical and electronics (E&E) sector where the index was 10.7 points in 2H17, much better than the 2.1 point-average across all sectors.”

“The E&E sector enjoyed an increase of export due to a strong demand from the smartphone market and a favourable ringgit rate against the US dollar,” Kajita, who is also chairman of the research committee, told The Malaysian Reserve.

The ongoing expansion of the local consumer market has also resulted in a positive investment movement among Japanese companies — mainly in the services sector such as retail stores, restaurants and hotels.

Investments in the manufacturing sector are also expected to improve.

Kajita said although the manufacturing sector has taken a wait-and-see approach for new investments due to some changes in the government’s foreign worker policy and Bank Negara Malaysia’s foreign-exchange policy last year, there are some potential manufacturing investments.

He said this is because Japanese firms are seeing the market expanding in Malaysia and worldwide.

In a meeting with the International Trade and Industry Ministry (MITI) last week, JACTIM said Japanese companies in Malaysia can contribute to the country’s 2020 high-income developed nation goal based on the analysis made from the survey.

MITI Minister Datuk Seri Mustapa Mohamed has encouraged Japanese companies to expand their current operations and invest in the manufacturing sector — which remains as the backbone of the economy.

In the recent third-quarter result, the manufacturing sector contributed 22.8% to the RM298.6 billion GDP.

Mustapa said the government is committed to facilitate and address the challenges faced by Japanese firms, such as shortage of manpower due to the strict foreign workers hiring policy.

“Despite the incessant changes at both the domestic and global economic environment, the Malaysian government continues to advocate and promote our manufacturing sector with strong investment policies and strategies.

“The government is committed in providing the necessary ecosystem that will encourage and support more manufacturing companies to innovate and adopt Industry 4.0 elements in their business processes, as reflected in the recently announced Budget 2018,” Mustapa said.

Meanwhile, JACTIM has appointed Tan Sri Asmat Kamaludin as adjunct counsellor to advise the chamber on negotiations with various local government agencies to address critical issues.

“We believe his appointment will be the beginning of Malaysia-Japan cooperation going into the next phase of development,” JACTIM said in a statement.

The former MITI secretary general currently serves as group chairman of Perodua Group and is a director at several Malaysian public companies.

He is also a governor at the Economic Research Institute for Asean and East Asia. Asmat was honoured with the Japanese emperor’s award in 1995 for his long-term contribution to the strengthening of bilateral economic ties between Japan and Malaysia.