Japanese businesses upbeat about investing in Malaysia

A total of 43% of Japanese companies that are already operating in Malaysia have expressed interest in expanding their businesses in the country. (Bernama pic)

PETALING JAYA: Despite the Covid-19 pandemic, Japanese companies invested RM8.8 billion in Malaysia last year, the highest since 2015, according to Nobuhiko Sasaki, chairman of the Japan External Trade Organization (Jetro).

Japanese investments in ASEAN as a whole also rose, reaching RM122 billion last year, which was almost at pre-pandemic levels. “This shows that recovery is on track,” Sasaki told FMT Business.

Adding to this positive outlook, Sasaki said 43% of the Japanese companies operating in Malaysia have indicated that they would like to expand their businesses in the country in the next one to two years.

“This also shows that Japanese businesses in Malaysia and other ASEAN countries are already recovering,” he said.

“It can be said that with the collaboration between Malaysian and Japanese companies that have a deep understanding of each other, we can overcome new challenges such as the environment, social and governance (ESG) factors in the post-Covid 19 era.”

Sasaki said ESG requirements, which involves meeting human rights and decarbonization needs, are beginning to have a significant impact on the supply chain.

“ESG is now a requirement of investment, financing, and dealing with customers. The attitude of respecting rights has become a basis for international competitiveness,” he said.

“Europe and the US are leading the global ESG investment movement. Nevertheless, Japan’s ESG investment is also on the rise.”

“We recognize that responding to sustainability, including ESG, is an important management issue that not only reduces risks but also provides opportunities for profit. It can be said that consideration is being given to proactively address these issues.”

Sasaki said that in the future, business efforts that emphasize sustainability, such as respect for human rights and decarbonization, are likely to progress further.

“These trends may not just create new business opportunities but will also raise issues such as increase in initial cost,” he said.

He said global emergencies and geopolitical events have shown that the existing global supply chain is vulnerable to unexpected happenings.

In addition to vulnerability to emergencies, the US-China friction and Russia’s invasion of Ukraine have rapidly made economic security a priority issue for governments and businesses.

“In other words, from a geopolitical perspective, it has become more important to build resilient supply chains to prepare for unforeseen circumstances,” he said.

“Jetro is also supporting the introduction of equipment, demonstration projects, feasibility studies, among others with the aim of diversifying overseas production bases in order to strengthen the supply chain between Japan and ASEAN.”

Acticle Source: FreeMalaysiaToday