As Malaysia celebrates the 60th anniversary of its independence, gained from the United Kingdom on Aug. 31, 1957, the Southeast Asian nation also celebrates the 60th anniversary of the establishment of diplomatic relations with Japan. These past 60 years have proven to be fruitful not only for the two nations’ political ties, but also for their economic relations.
Official visits by key figures of both countries show the value each side places on the relationship. Malaysian Prime Minister Najib Razak has visited Japan every year since 2013, while Shinzo Abe has visited Malaysia three times as prime minister. In April, Crown Prince Naruhito made an official overseas trip to Malaysia, 11 years after Emperor Akihito and Empress Michiko did the same.
Diplomatic and political ties naturally led to stronger economic relations. The “Look East” policy moved Malaysia away from its colonial ruler Britain and other Western nations in favor of development among Asian countries, especially Japan.
In the first stage of the “Look East” policy from 1982 to 2012, Malaysians sought training and sponsorship in Japan to learn skills and technical abilities to improve their home country. Through cooperation and support from Japan, Malaysia became one of the so-called economic tigers of Asia.
During this time, Malaysia and Japan signed an economic partnership agreement that went into effect in July 2006.
Since 2012, Malaysia has shifted the focus of the policy, seeking more advanced cooperation. Two projects under this new focus show the deeper economic ties between Malaysia and Japan.
Under the Look East policy 2.0, which started in 2012, small and medium-size Malaysian enterprises have learned from Japanese industry about food safety and security at the government’s Hokkaido Food Complex in the Tokachi area of Hokkaido.
Malaysian companies have also collaborated with Japanese companies in developing a platform for mobile digital wallet payment systems.
An emerging market for Japanese companies centers on halal products, as Malaysia has one of the largest populations of Muslims in Southeast Asia.
Several Japanese companies in Malaysia have already adopted Malaysia’s halal standards and, with Tokyo hosting the 2020 Olympic Games, more collaboration is underway to enhance halal awareness and training and promote halal-related trade and investment. Already, at least six Japanese halal certification bodies are recognized by Malaysia.
Malaysia is also at the forefront of the new economy with the world’s first Digital Free Trade Zone (DFTZ). Launched in March, the goal is to promote trade and increase the growth of Malaysia’s e-commerce — aiming to double such growth, create 60,000 jobs and generate $65 billion in trade — by helping firms such as small and medium-size enterprises export goods, while also lowering tariffs on imports.
The DFTZ will have an e-fulfillment hub, satellite services hub and e-services platform. The e-fulfillment hub will be based at KLIA Aeropolis, the “city” built at Kuala Lumpur International Airport, to facilitate the movement of goods. KLIA Aeropolis, with its business, aerospace and logistics parks, aims to be a leader in air cargo and logistics while also helping to draw visitors through tourism and MICE (meetings, incentives, conferences and exhibitions). The facility also houses a shopping outlet and the Sepang International Circuit that hosts Malaysia’s Formula One grand prix race.
At the launch of the DFTZ was China’s Jack Ma, the founder and executive chairman of e-commerce giant Alibaba Group, who was appointed by Malaysia to be the government’s digital economy adviser. As Alibaba’s investment in an 80,000-sq.-meter distribution center at KLIA Aeropolis shows, Japanese companies can similarly look to benefit from the DFTZ.
All these developments mean the future is bright for Malaysia-Japan relations.