KUALA LUMPUR, Aug 14 — Japan External Trade Organisation (Jetro) aims to deepen collaborations between Japanese and Malaysian companies in line with new areas of growth in the post-pandemic era.
Jetro chairman and chief executive officer Nobuhiko Sasaki said the Look East Policy (LEP) had built a strong understanding and relationship between Japanese and Malaysian companies to seize new business opportunities and overcome disruptions in the economy under the current COVID-19 endemic stage.
This year marks the 40th anniversary of Malaysia’s LEP which was introduced by the government to learn and emulate Japanese work practices.
Sasaki said trade and investment relationships between both countries are expected to strengthen further and create new business opportunities that Jetro is keen to promote, particularly in smart manufacturing, Japanese food products and carbon-neutral development.
“In the manufacturing sector, we will like to promote business matchings between Malaysian and Japanese companies in smart manufacturing to introduce industry 4.0 solutions,” he told Bernama in an interview.
Sasaki was in Malaysia recently to participate in the 39th Malaysia-Japan Economic Association and its counterpart known as the Japan-Malaysia Economic Association joint conference in Kuala Lumpur on Aug 1.
During his three-day stay in the country, he had meetings with several leaders from the government and industrial sector, discussing ways to further improve investment from Japan to Malaysia as well as promoting various fields of business between the two countries, including expanding the business to third countries from Malaysia.
He said there have been many success stories of business development between Malaysian and Japanese startups and companies in various sectors.
“This fiscal year, we would like to strengthen matching support between major Japanese companies and venture capitals with Malaysian companies, fostering a foundation for two-way business formation.
“Jetro will also support business matching in the green sector through J-Bridge, a business platform for international open innovation creation between Japanese companies, startups, and digital companies,” said Sasaki.
He emphasised that under J-Bridge for the financial year 2022, Jetro aimed to strengthen cooperation with private accelerators, such as the Malaysia Digital Economy Corporation (MDEC), Sunway iLabs and NEXEA to promote information dissemination and matching support in the digital field and to solve social issues in Malaysia.
Sasaki also said Japanese companies are keen to contribute to Malaysia’s carbon neutral agenda, and Jetro plans to provide a report summarising major Malaysian companies in this sector and hold a webinar.
In this respect, he said that Petronas and three Japanese companies have announced a joint research project to collect and store carbon dioxide in the country.
Malaysia, like Japan, has set the goal of becoming carbon neutral by 2050 and reducing greenhouse gas emissions to virtually zero.
“The promotion of decarbonisation is an important pillar of economic and social reform with the Japanese government establishing a two trillion yen of green innovation fund to support companies working on carbon neutral research and development including demonstrations and social implementation of the outcomes,” he said.
Sasaki noted that decarbonisation has become an important investment activity for Japan and the environmental, social and governance (ESG) issues are also beginning to have a significant impact on the supply chains.
“ESG issues are now seen as a condition of investment, financing, and dealing with customers. Furthermore, the attitude of respecting ESG issues has become a source of international competitiveness,” he noted.
Sasaki said another new initiative for Jetro is the halal sector, for which business interest in this field has been increasing.
“As a new initiative by Jetro, we plan to permanently exhibit halal-certified and halal-friendly Japanese food samples in Kuala Lumpur, introduce products and offer samples to Malaysian buyers, and conduct online business negotiations.
“Some of the products on permanent display will be exhibited at the Malaysia International Halal Showcase (MIHAS), which will be held in September, and will be introduced to trade visitors.
“We would like to cater to the needs of Malaysian buyers who seek halal and Muslim-friendly Japanese food products,” he said.
Sasaki emphasised that Malaysia will become even more attractive as an investment destination for Japanese companies by leveraging the strategic and economic benefits obtained from the Indo-Pacific Economic Framework for Prosperity (IPEF).
He pointed out that as the IPEF is recognised as a framework for deepening economic engagement among participating countries, for which Japan and Malaysia are among the partners, it will further strengthen cooperation and economic relationship between the two countries.
“It is hoped that common standards will be established among participating countries on supply chain resilience, clean energy and decarbonisation, digital economy, labour standards, transparency, and regulatory practices.
“It is expected that the formation of a common standard will promote the harmonisation of rules between Japan and Malaysia,” he added.
For Malaysia in particular, it will help to further solidify the nation’s position as a hub for the electrical and electronics industry and strengthen its semiconductor supply chain, Sasaki explained.
In this respect, Malaysia has the location advantage of hub functions with increased intra-regional transactions and with the Regional Comprehensive Economic Partnership (RCEP) agreement that came into force for Malaysia in March this year, he added.
“For trade in goods, the scope of utilisation of tariff concessions will expand as Japan, China, and ASEAN, which have large trading volumes, will be in the same economic zone.
“In order to improve the utilisation rate, it is important for the governments of each country to accurately provide necessary information to companies that use it, in other words, to centralise and disseminate RCEP-related information,” he said.
Sasaki emphasised that in the post-pandemic era, trade and investment would likely expand by leaps and bounds with new emerging trends of trade frameworks and agreements.
“The total trade value between Japan and ASEAN in the first quarter of 2022 was approximately US$63 billion (US$1=RM4.44).
“This is much higher than the value pre-pandemic, and it is the highest number recorded in nine and a half years,” he said.
Trade with Malaysia is also expanding, he said, adding that in the first quarter of 2022, it exceeded US$10 billion, a 30 per cent increase from the pre-pandemic period in comparison to the first quarter of 2019.
“Direct investment in Malaysia also reached US$2.1 billion in 2021, the highest since 2015,” he said.
Sasaki noted that Japanese companies have embarked to move forward post-pandemic by increasing investment overseas amid the challenges in the supply chain affecting manufacturers.
“It has become apparent that the existing supply chain is vulnerable to emergencies,” he said.
In addition to vulnerability to emergencies, Sasaki said 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.
“Jetro is also supporting the introduction of equipment, demonstration projects and feasibility studies, among others, to diversify overseas production bases in order to strengthen the supply chain between Japan and ASEAN,” he said.
With respect to human rights, he pointed out that according to a survey by Jetro, 66.7 per cent of Japanese companies operating in Malaysia recognise and address human rights issues such as ensuring fair labour practices and appropriate occupational safety and health management.
“This percentage is the highest in Malaysia among the six major ASEAN countries as Japanese companies have traditionally placed importance on their employees.
“By guaranteeing long-term employment and accumulating company-specific know-how and skills in employees, Japanese companies have increased their competitiveness and encouraged cooperation within the organisation and bottom-up decision-making,” he added.
Furthermore, he said that in February 2022, the Japanese government announced that it would launch a guideline study group for respecting human rights in the supply chain and create cross-industry guidelines.
“Japanese companies are undertaking various initiatives based on these action plans and guidelines,” Sasaki said.
