Japanese firms diversifying their investments in Malaysia

Japanese ambassador to Malaysia Hiroshi Oka said last year, Japan was the largest supplier of foreign direct investments in Malaysia. (Bernama pic)

KUALA LUMPUR: After decades of focusing their operations on the electrical and electronics (E&E) sector, Japanese companies are now diversifying their huge investments into new areas to reaffirm their confidence in Malaysia as their top choice foreign investment destination.

Japanese ambassador to Malaysia Hiroshi Oka said new companies are starting to grow in new areas in the country by venturing into the health, medical device manufacturing, digital technology and halal food industries.

“Japanese companies had started coming into Malaysia in the 1970s and, when the trends accelerated with the start of the Look East Policy in the 1980s, globally famous Japanese companies like Toray, Hitachi, Sony and Panasonic all rushed to operate in Malaysia.

“There are now about 1,500 Japanese companies in Malaysia and these companies have contributed to industrialising Malaysia. About 40% of Malaysia’s exports are from the E&E sector and this field has traditionally been exactly the area of focus of Japanese direct investment.

“We have grown together with Malaysia’s industrialisation,” he told Bernama.

While industries across the board suffered serious declines resulting in massive job cuts due to the Covid-19 pandemic, Japanese companies have managed to retain their employees, totalling 340,000 in the manufacturing sector alone, in the many months of the movement control order.

This is one of the most fantastic dimensions of Japanese investments in Malaysia, Oka said,

He said that last year Japan was the largest supplier of foreign direct investments in Malaysia, accounting for about one-third of total direct investment flow into Malaysia, “and this is the ringing endorsement by the Japanese business about the attractiveness of Malaysia and, interestingly, the areas of Japanese investment has significantly diversified”.

In the health sector, last year saw Mitsui, one of Japan’s leading trading houses, acquiring additional 16% of Malaysia’s global hospital network, IHH.

A Japanese medical device manufacturing company, which has been producing highly sophisticated cardiovascular medical devices in Japan, has established its first overseas new plant in Malaysia to export its products back to Japan.

“The company is thinking about exporting its high-quality medical devices to the Asian markets as well in the future. So, manufacturing medical devices is one of the new areas emerging for Japanese investments in Malaysia,” he added.

On digital technology, a start-up company was set up in Malaysia this year to provide mobility data based services to improve driving safety awareness while having fun, and to contribute to the distribution of traffic volume and reduction of accidents.

Another established name, Hitachi, is also providing solution services based on digital technology and is turning Malaysia into its regional hub for this service in the entire Asean region.

On the halal industry, the ambassador said increasingly, Japanese food industries are attracted to Malaysia as the halal certificate provided by Malaysia is regarded highly credible globally.

“They are making Malaysia a staging post from which to go out into the Islamic and Middle Eastern market with their food products having the Malaysian halal certificate,” said Oka.

Yet another new area for the Japanese investment in Malaysia is the aircraft industry.

“Within Asean, we are exploring cooperation with the Malaysian government to promote Japanese private sector participation in the aircraft industry in Malaysia for its high potential.

“This is an example of the efforts the government of Japan is eagerly making to further propel Japanese companies to come to Malaysia to pursue business collaboration with Malaysian companies through investment,” he said.

On the Covid-19 pandemic, he said it had not affected the attractiveness of Malaysia as a destination for Japanese business.

“On the contrary, in the light of the attractiveness of Malaysia as a destination for Japanese business, we as a government are supporting the Japanese businesses to make further commitments to Malaysia,” he said.