National | Malaysia special

Past and present of Malaysia-Japan relations

by Hiroyuki Ishige

Chairman And Ceo Of Japan External Trade Organization
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On behalf of the Japan External Trade Organization (JETRO), I extend my heartfelt congratulations on the inauguration of the Mahathir administration and appointment of Darell Leiking as the minister of international trade and industry.

With the 14th general election on May 9, a change in government was seen for the first time in Malaysian history. The voter turnout exceeded 80 percent, reflecting the will of the people.

Mahathir Mohamad, who served as the fourth prime minister from 1981 to 2003, was appointed once more as the seventh. In 1981, Mahathir advocated what became known as the Look East Policy. Based on the premise that the secret to the success and development of Japan, Korea and Taiwan lay in their labor ethics and enthusiasm for learning and work, this policy called for Malaysia to incorporate these elements from the three countries to develop its own economy and society and establish an industrial foundation for the country.

At the helm of the Malaysian government again, Mahathir visited Japan this June on his first trip overseas, where he affirmed his intention to revive the Look East Policy, saying, “I would like to continue efforts to learn much from Japan and realize sustainable growth by following Japanese labor ethics and their working attitude.”

With the foreign direct investment by Japanese companies amounting to approximately ¥1.6 trillion, for Malaysia, Japan is the largest investor in the manufacturing industry, and the second-largest investor after neighboring Singapore when also including the service industry. There are now about 1,400 Japanese companies in Malaysia, and they have been deepening the economic relationship in every possible industry, such as electronics, automobiles and machinery, metals, chemicals and services.

In a survey of Japanese companies in Malaysia conducted from January to March by the Japan Chamber of Commerce and Industry, Malaysia, approximately 40 percent of all responding companies (184 valid responses) answered that they intended to expand business in Malaysia, an increased percentage from the previous year. When including companies expecting to maintain current levels, this ratio reaches 98 percent, while the ratio of companies intending to reduce business or withdraw is the smallest in the past five years. Furthermore, over half plan to introduce technologies related to “Industry 4.0” into their products or services. At the time of the prime minister’s visit to Japan, he expressed eagerness to encourage Malaysian companies to learn about the advanced technologies and experiences of Japanese companies. Including new fields such as big data, it is expected that the cooperative relationship between Malaysia and Japan will continue to deepen in the future.

JETRO set up its office in Kuala Lumpur in 1958, just one year after Malaysia realized its independence and established diplomatic relations with Japan. Since then, we have been assisting Japanese small and medium-sized enterprises (SMEs) in entering Malaysia through our various programs. Malaysia is one of the destinations Japanese SMEs are most interested in to expand their business, and many are considering entry to the market. And this interest has only grown since the change in government. Given Malaysia’s high income levels within Southeast Asia, a growing number of Japanese companies are keen to export agricultural products and food to the country or enter its market to set up Japanese restaurants, which are very popular in the country. In this regard, we at JETRO help create business opportunities in new fields, such as by matching Japanese companies with Malaysian startups.

Regarding relations between our countries, we have to keep in mind the strong ties on the trade side. Malaysia has been at the forefront of free trade in Asia as it has consistently maintained an open economic policy since its independence. Malaysia and Japan concluded the Japan-Malaysia Economic Partnership Agreement in 2006 and are fellow signatories of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP-11). Malaysia, like Japan, is determined in its promotion of the Regional Comprehensive Economic Partnership (RCEP). I believe that we both bear the responsibility to play a leading role in promoting free trade and forming new rules to improve business reliability through the facilitation of the TPP-11 and RCEP with high standards.

In strengthening ties between the two countries, economic or otherwise, nothing is more important than people. Under the Look East Policy, the Malaysian government sent numerous students and corporate trainees to Japan. Upon returning to the country after graduating from universities or finishing their programs at companies in Japan, those people have gone on to take high positions in Japanese companies and the Malaysian government, where they have played an active role in developing their country as a bridge between both countries. I hope that an even stronger bilateral relationship will grow under the Look East Policy in the new era, so that we may see a rejuvenation in such person-to-person connections between Malaysia and Japan.


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