By Sharon Chang
Since the establishment of Malaysia-Japan diplomatic ties in 1957, it has progressed tremendously with the Look East Policy (LEP) paving the way to greater economic focus on trade and investment opportunities.
“The Look East Policy has always been a guiding light for our bilateral relations. Next year marks the 40th anniversary and we look forward to celebrating this achievement. I am determined to further strengthen the cooperation between both our countries,” says His Excellency Oka Hiroshi, Ambassador of Japan to Malaysia, in an exclusive interview with Business Today.
Japan has very strong economic presence in Malaysia. In your view, what are the new emerging areas besides manufacturing will Japanese investors consider? Will the Covid-19 outbreak severely affect investment prospects in Malaysia?
Firstly, let me summarise the Japanese business presence here in Malaysia. Currently, there are over 1,400 Japanese companies operating in Malaysia, around half of them are in the manufacturing sector mainly the electrical and electronics (E&E) industry such as Panasonic, ALPS ELECTRIC, and the other half are in the services sector.
I would like to stress that in the manufacturing sector alone, these Japanese companies employ more than 340,000 Malaysian employees. Although during the Movement Control Order (MCO) these Japanese companies had to cease operations, they fully retained the employment of their workers. It was to ensure that Malaysian employees still have a job and can maintain their daily lives.
I would also like to highlight the fact that Japan was the largest investor in Malaysia last year, accounting for more than one-third of foreign direct investment inflows. There was a total of RM10.4 billion investment from Japan, of which RM1.5 billion was in the manufacturing sector and RM8.0 billion was in the service sector.
As I like to point out, Japanese firms have a large presence in the manufacturing sector, of which E&E plays a dominant role. And furthermore recently, Japanese investments in the service sector have been gradually increasing.
One area which showed a significant increase in Japanese investment in the past few years is the healthcare sector. Mitsui & Co., one of the giant trading houses in Japan, has acquired a 16 percent share in IHH Healthcare worth RM8.4 billion from Khazanah Nasional. The healthcare sector is particularly seen as a potential for future expansion, especially based on the post-Covid-19 economic outlook. In this context, Japan Lifeline, a leading Japanese company specialising in the manufacturing of cardiovascular devices, has recently opened a new factory in Penang, with investment of over RM80 million.
Another sector which has potential for expansion is the digital economy, as Malaysia gears up for digitalisation in the post-Covid-19 period. For example, Hitachi’s partnership with Malaysia-based Fusionex International Plc. Hitachi being a leading Japanese company with
state-of-the-art digital technology as a solution service provider, together with Fusionex, a market leader in Artificial Intelligence and dataanalytics, aim to integrate human resource and technology to serve as regional hub for the Asia Pacific market.
Another example of Japanese investment in this green space is Smart Drive, a startup company specialising in providing servicebased on mobility data. In January this year, they have set up a subsidiary in Malaysia, and recently signed a memorandum of understanding (MOU) with DreamEDGE Sdn Bhd.
I hope to see more of such collaborations between Japanese and Malaysian companies in the coming years.
Given the worsening trade tensions between China and the US, how can Malaysia attract investment from Japanese companies relocating operations from China? In your view, are the measures included in PENJANA enough to attract foreign investment?
I have been here the last eight months and am confident enough to recommend Malaysia to potential Japanese investors. It is possible for Malaysia to become a hub for export to the ASEAN market as well as a gateway to Islamic countries.
Furthermore, majority of Malaysians are English speaking and the country is less prone to natural disasters like earthquakes and typhoons which are added advantages for Malaysia as an investment destination.
In fact, Malaysia is already an important player in the supply chain for E&E, which contributes around 40 percent to its overall export. As it has layer of high-quality supply chain network of SMEs as manufacturing base for various products, is also attractive for future investors.
In the meantime, I believe there is room for improvement to attract more investors to Malaysia. One is to relax streamline procedures and regulations for new investors.
In this context, JACTIM, the Japanese Chamber of Trade and Industry, suggests the setting up of a one-stop centre for new investors to integrate all the necessary paperwork and information for future investment.
More incentives for investment such as reinvestment allowance and reduction in corporate tax are also welcome for investors. I want to commend the Malaysian Government on its efforts in the recent PENJANA economic stimulus package. Hopefully, there will be more productive consultations with the Malaysian government.
Where do you see the opportunities for Malaysian businesses investing in Japan?
I wholeheartedly welcome investments from Malaysia to Japan. With the Tokyo Olympics to be held next year, and the Osaka EXPO in 2025, there are huge investment opportunities such as in the halal industry.
There are some Malaysian real estate investments presence in Japan, such as YTL Group project in Niseko, a Berjaya Corporation joint-venture hotel-condo project in Yokohama’s waterfront Minato Mirai 21 district, as well as an integrated development project in Izumisano City by SP Setia.
With such investments it would attract more Malaysian tourists to Japan. Last year Malaysian tourists to Japan exceeded 500,000, the highest in history.
Also, currently both our countries are working together on accepting Malaysians to Japan under the ‘specified skilled workers’ status. Under this scheme, Malaysians with the necessary Japanese language proficiency and specified skills can work in Japan. The objective is to ensure that Japan is accessible to other countries including Malaysia.
It is very encouraging that we are at the final stages of discussions.
Is Japan still interested in extending the scope of the policy to encompass an opening of Japanese universities in Malaysia – offering lower costs for a world class education to students across ASEAN?
Since the LEP was launched in 1981, more than 8,000 Malaysians have graduated from higher education institutes in Japan who are now playing leading roles in various fields in Malaysia. The Secretary General of Ministry of Finance, Education and Ministry of Higher Education are alumnus of a Japanese University.
LEP has always been a guiding light for our bilateral relations and education has been at the core. Next year marks the 40th anniversary of LEP and we look forward to celebrating this achievement.
Malaysia-Japan International Institute of Technology (MJIIT) was established in 2011 as a faculty under UTM, a government-to-government cooperation project between Malaysia and Japan.
MJIIT symbolises the long-lasting bilateral cooperation under LEP. Nine Japanese professors together with a hundred faculty members are teaching over 1,000 students graduated from the under-graduate and post-graduate programmes.
MJIIT has played a significant part to assist the spread of Covid-19, whereby some of the postgraduates led the process of developing SOPs and setting up quarantine stations for the country.
I am pleased the total number of Malaysian students for higher education in Japan have increased, this shows that they are still keen to study in Japan. According to Japan Student Services Organisation, in 2008 there was only 2,271 students as compared to 3,094 in 2018.
Paving on the achievements of LEP, and in response to the request from the Malaysian government, University of Tsukuba, a leading national university in Japan with 3 Nobel Prize winners, have expressed their intention to open branch campus. This will be the first ever overseas branch campus of a Japanese university.
If the discussion is successful, Malaysians can have a Japanese tertiary education on home ground and most importantly, it will be a new symbol of LEP.
Furthermore, Malaysia can also become an education hub for those from ASEAN countries and beyond to study at a Japanese university without going to Japan.
Can we expect more mutual learning of governance structure between Malaysia and Japan to deal with disasters, especially with regards to Covid-19?
Unlike Malaysia, Japan is prone to various disasters such as earthquakes and typhoons. Therefore, we have developed a resilient governance structure to overcome such disasters. One salient point is to establish a special headquarters in the Cabinet Secretariat, so that the Prime Minister himself will directly guide and supervise in disaster management. For instance, the Novel Coronavirus Response Headquarters was set up in the Cabinet Secretariat to oversee the coordination among various governmental agencies for the recent Covid-19 pandemic.
Regarding the response to Covid-19, I would like to praise the success of Malaysians as well as the Malaysian government for effectively containing the pandemic.
The situation in Japan has also been stabilising, with the nationwide state of emergency lifted on May 25. Efforts such as avoiding the so-called “Three Cs” — Closed spaces with poor ventilation, Crowded places, and Close-contact settings, such as closerange conversations, are widely observed in both countries, which are important in the ‘new normal’.
In your opinion, what can be done to further strengthen the relations between Malaysia and Japan?
As we will be celebrating the 40th anniversary of the LEP next year, I am determined to take this opportunity to further strengthen our cooperation.
Japan and Malaysia have been cooperating towards safe navigation in the Strait of Malacca for the past 50 years such as joint hydrographic surveys and nautical charts publication. Since its establishment in 2005, Japan has supported the Malaysian Maritime Enforcement Agency (MMEA) by providing patrol vessels to MMEA, and has been supporting training programme for Vessel Traffic Service (VTS) officers at the Maritime Transport Training Institute (MATRAIN) as well as The Sultan Ahmad Shah Maritime Academy (AMSAS).
Japan has also conducted Humanitarian Assistance and Disaster Relief Seminar on board Japan Maritime Self-Defense Force vessel JS IZUMO. We will continue to work together to ensure the free and open maritime order based on the rule of law.
For post-Covid-19 cooperation, Japan has announced its contribution to the establishment of ASEAN Centre for infectious diseases and public health emergencies and is willing to work with Malaysia.
As Malaysia is the host country of APEC this year, we are ready to support Malaysia towards the success of APEC. We want to send a strong joint message to overcome this economic difficulty impacted by Covid-19, based on free and open trade and investments.
I can see indefinite horizon and more opportunities for future cooperation between Japan and Malaysia.
“In the global arena, under the strategic partnership, both our countries can contribute towards regional and global issues”