Create new business opportunities based on mutual trust

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Trade between Japan and Malaysia is growing. In the first half of 2022, it reached around $20 billion, an increase of 30% compared to before the COVID-19 pandemic. In 2021, Japanese direct investment in Malaysia reached $2.1 billion, the highest since 2015.

Currently, about 1,600 Japanese companies are operating in Malaysia and half of them are manufacturing companies. According to a survey by the Japan External Trade Organization, about 43% of Japanese companies in Malaysia would like to expand their business in the next one to two years. Specifically, they are more likely to expect to expand “sales functions” and “production functions of high value-added products and general-purpose products” compared to other members of the Association of Asian Nations Southeast, which indicates the diversification of functions.

After the COVID-19 pandemic, most companies added the concept of risk management to their supply chains, which were primarily cost-driven. In addition, US-China friction and the Russian invasion of Ukraine have made economic security a top priority for governments and businesses. From a geopolitical perspective, it can be said that building a resilient supply chain to prepare for unforeseen circumstances has become more important. Environmental, social and governance factors are also beginning to have a significant impact on supply chains. Meeting human rights and decarbonization requirements in supply chains is now seen as a condition of investment, financing and customer relationships.

It is recognized that addressing sustainability, including ESG factors, is an important management issue that not only reduces risk but also provides opportunities for profit. From the perspective of medium and long-term improvement of the value of the company, it can be said that attention is paid proactively to the resolution of these problems.

Trade relations between Malaysia and Japan in the services sector are deepening. As part of Malaysia’s steady economic growth, consumers’ purchasing power has increased. In recent years, there has been a significant increase in the number of Japanese companies interested in markets and companies with growth potential, including in the halal sector.

JETRO is also strengthening its efforts in the area of ​​digital transformation. There are more and more successful business developments in Malaysia and other countries under the partnership between Japanese digital companies and Malaysian partners. As a multi-ethnic country, Malaysia in particular will play an important role as a test bed when Japanese digital businesses expand globally.

As a result, trade relations between Japan and Malaysia are steadily growing and diversifying. The year 2022 marks the 65th anniversary of the establishment of diplomatic relations between Japan and Malaysia and the 40th anniversary of the Malaysian Look East policy. About 26,000 people have so far been sent to Japan to study at universities and companies under the Look East policy. Malaysians who know Japan well tend to be active in the industry and have formed partnerships. In many cases, the companies that have business relationships have a deep understanding of each other.

Collaboration between Malaysian and Japanese companies with such trusted relationships has great potential to overcome new social issues and unlock new business opportunities, including in digitalization, in the post-COVID-19 era. JETRO wishes to maintain a close dialogue with the Malaysian government, its agencies and industry and support new business opportunities through collaboration between Malaysian and Japanese companies.

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