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Japanese firms diversifying investments in Malaysia

Updated: Oct 5, 2020

Japanese firms diversifying investments in Malaysia

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 started coming to Malaysia in the 1970s and, when the trends accelerated with the start of the Look East Policy in the 80s, globally famous Japanese companies like Toray, Hitachi, Sony and Panasonic all rushed to operate in Malaysia. “There are now in total about 1,500 Japanese companies in Malaysia and these companies have contributed to industrialise Malaysia. About 40% of Malaysia’s export is from the E&E sector and this E&E sector has traditionally been exactly the areas 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 maintain and retain employees totalling 340,000 in manufacturing alone. Oka said that last year Japan was the largest supplier of foreign direct investment 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 Healthcare. A Japanese medical device maker, which has been producing highly sophisticated cardiovascular equipment in Japan, has established its first overseas new plant in Malaysia to export its products back to Japan. On digital technology, a startup was set up in Malaysia this year to provide mobility databased services to improve driving safety awareness and to contribute to the distribution of traffic volume and reduction of accidents.

Another established name, Hitachi, is providing solutions based on digital technology and is turning Malaysia into its regional hub for such services in the entire Asean region. On the halal industry, Oka said Japanese food industries are increasingly attracted to Malaysia as the halal certificate provided by Malaysia is highly regarded globally.

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