History has proven that Malaysia is a resilient nation, despite multiple challenges faced by the global economy. The country has a well-diversified economy resting on the back of solid economic fundamentals. With a stable economic and political environment, good infrastructure and proximity to the large Association of Southeast Asian Nations (ASEAN) and Asia-Pacific markets, Japanese firms have long found Malaysia to be suited for their activities as Malaysia is cost-competitive hub for investments in this region.
Since the 1980s, Japan has been among the country’s top source of foreign direct investment. As of the end of 2016, a total of 2,621 projects with Japanese participation have been implemented with investments valued at $27.8 billion. These projects are mainly in the electronics and electrical product, chemical and chemical product, non-metallic mineral product, transport equipment and basic metal product areas.
Malaysia is proud to host notable Japanese companies such as Rohm-Wako Electronic Sdn. Bhd., Panasonic Corp., Nippon Electric Glass Co., Toray Industries Inc., Fuji Electric Co., Ibiden Co., Sony Corp., NEC Corp. and Honda Motor Co. Japanese investors are also present in Malaysia’s services sector, active in retail, convenience stores, financial services, creative content and regional areas in addition to many sales and trading offices that have existed over the years. In recent years, more and more Japanese companies are using Malaysia as their base for conducting their regional and global operations. This includes the approved “Principal Hubs” of Sharp Corp. and Daikin Industries Ltd., both renowned Japanese companies in the consumer electronics sector.
The strategic importance of Japan to Malaysia has led the Malaysian Investment Development Authority (MIDA), the principal investment promotion agency for the country, to establish offices in Tokyo and Osaka in 1973 and 1982 respectively. They are responsible for promoting Japanese investment in Malaysia, providing potential investors with the latest information on policies and opportunities in the manufacturing and services sectors. They also provide the necessary assistance to potential Japanese investors interested in seeking joint venture partners or technology collaborations in Malaysia.
2017 marks the 60th anniversary of Malaysia-Japan bilateral ties. Many initiatives such as the “Second Wave of the Look East Policy” (LEP 2.0) have contributed to this strong link between our nations. LEP 2.0 is expected to increase more technology transfers, effective collaborations in research and development and successful business joint ventures.
Moving forward, in line with Malaysia’s aspiration to become an advanced nation, we look ahead to receiving more quality investment from Japan, particularly in emerging high technology, capital-intensive, high-value-added, knowledge-based, skills-intensive and export-oriented new growth areas that are expected to provide high-income jobs.
These include biotechnology, advanced electronics, display technology, optics and photonics, renewable energy, aerospace, machinery and equipment, halal, pharmaceuticals and medical devices in the manufacturing sector. Malaysia’s services sector also provides exciting opportunities for investment, including regional hubs, business and professional services and information and communications technology services, among others.
Along with the rise of the digital revolution, Malaysia is also embracing “Industry 4.0” to raise competitiveness by encouraging companies to adopt smart manufacturing technologies and processes. Japan is already a robotics powerhouse, with many of its companies, such as Daikin Industries Ltd., Hitachi Ltd. and Konica Minolta Inc., actively involved in automation and “Industry 4.0.” There are certainly many areas of potential collaboration between both countries within this sphere.
Malaysia has been recognized as an attractive investment destination by a multitude of independent international institutes and organizations. Recently, a Moody’s Investors Service credit analysis has reaffirmed Malaysia as being in the “A” category. Additionally, Malaysia is expected to achieve gross domestic product growth of 4.3 percent in 2017.
In its latest assessment of Malaysia, the International Monetary Fund highlighted that the country has made significant progress toward achieving high-income status. Its economy continues to perform well, despite significant headwinds. The World Bank also recently indicated that while many nations are affected by falling commodity prices, Malaysia stands out for having transformed itself from a narrow commodity-exporting nation into a modern diversified economy.
A 2017 survey by BAV Consulting and the Wharton School of the University of Pennsylvania named Malaysia as the best country in which to invest. A recent Cushman & Wakefield report titled “Manufacturing Risk Index 2017” again named Malaysia as the most attractive location for manufacturers.
MIDA looks forward to continuously working together with Japanese investors to capitalize on the opportunities that are present in the ASEAN region.
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