Business activities and opportunities by Japanese companies in Malaysia The Japanese Chamber of Trade & Industry, Malaysia Masakuni Nakayama, Vice-Chairman of trade and investment committee 1 June, 2016
Introduction of JACTIM Established in 1983 592 Members (As of April 2016) 121 Members (1983) Promote economic relations between Malaysia and Japan, in the areas of international trading, commerce, industries and investment, as well as protecting the interest of Japanese companies and promoting mutual amity among member companies. 3 Pillars of Activities 1. Promote dialogue with Malaysian Government and propose industrial policy 2.Provide useful information and service to Japanese companies 3.Contribute to the development in culture, education and society through JACTIM Foundation
Innovation and enhancement of industry The 11th Malaysia plan (2016~2020) Investment Data (Manufacturing Sector) INDEX 2010 2011 2012 2013 2014 2015 Malaysian government expects the overall investment for development in the next five years to reach approximately 260 billion Ringgit. Eg.Construction of the high speed rail link between Kuala Lumpur and Singapore Move from labour-intensive to a more value-added industrial structure Tax incentive for promoting automation The extension of the re-investment allowance Foreign Direct Investment (billion RM) Projects approved (billion RM) Country Ranking Japan rank 29.0 34.2 20.7 30.5 39.5 21.9 40 101 27 36 109 40 2 1 1 4 1 2 Source: MIDA Facts and Figures
Innovation and enhancement of industry 2016 Questionnaire conducted by JACTIM & JETRO for Japanese companies in Malaysia 70% 60% 50% 40% 30% 20% 10% Malaysia's appeal as an investment destination (Multiple answer) 65.0% 62.9% 53.8% 42.7% 38.5% 37.8% 28.7% (n=143) 23.1% 0% Affinity towards Japan English skill of workers and people Infrequent Favourable living Well-developed Safety/security Political stability Labour cost, natural disasters environment infrastructure personnel expenses Source: 2013 Questionnaire conducted by JACTIM & JETRO for Japanese companies in Malaysia Affinity towards Japan, English skill of workers and people, Infrequent natural disasters were marked 50% above.
The expectations for TPP & HALAL hub in MALAYSIA Impact of TPP in Malaysia An estimate by Malaysian Government, the cumulative effects for 10 years from 2018 on the 50% reduction of non-tariff barriers in TPP... 2016 Questionnaire conducted by JACTIM & JETRO for Japanese companies in Malaysia Using Trans-Pacific Partnership (TPP) Agreement (%) n=136 GDP will benefit approximately Plan to use 6.6 US$ 211 billion Total amount of investment US$ 239 billion Consider to use 55.9 37.5 Growth in GDP 1.15% up No plan to use (Source)"2016 Survey of Japanese Companies in Malaysia by JACTIM/JETRO" 5
The expectations for TPP & HALAL hub in MALAYSIA Domestic Industry Protection Foreign Investment Restriction Anti-growth of domestic industry (e.g.) Open to foreign investor up to 30% but Convenience Store Franchise Act DOES NOT allow foreign licenser to invest in Malaysian franchisor We believe that the convenience store makes small retailers in Malaysia revitalize and gives a positive impact on Service Industry
The expectations for TPP & HALAL hub in MALAYSIA Halal JAKIM (Department of Islamic Advancement of Malaysia) The government provides full support of the Halal certification process on products and services. Malaysian halal certification is widely recognized in terms of its credibility and quality, thus expanding business into Malaysia leads to success in other Islamic countries. Food Cosmetic Distribution Finance Insurance
The expectations for TPP & HALAL hub in MALAYSIA Center of ASEAN Strategic Location Source: KLIA website Muslims as a Share of World Population, 1990-2030 10 8 6 4 2 0 Billion 4.2 4.8 5.3 5.8 6.1 1.1 1.3 1.6 1.9 2.2 Non-Muslim Muslim 26.4%!! 1990 2000 2010 2020 2030 Source: Pew Research Center s Forum on Region & Public, The Future of the Global Muslim Population Connected transportation network - Global and regional connectivity - ASEAN : 3 hour flight radius - Other Key cities : 6 to 8 hour flight radius (Tokyo, Beijing, Dubai, etc.) No major natural disaster - earthquake, tsunami/flood, tornado Gateway to access Muslim Market Japanese companies can make Malaysia a gateway to access Muslim market in ASEAN and Middle East
Labor issues faced by Japanese Companies in Malaysia 2016 Questionnaire conducted by JACTIM & JETRO for Japanese companies in Malaysia 45 Issues/Problems of Labor Policy and Employment Environment (Multiple answer) 40 37.8 (n=143 Multiple answers allowed) 35 33.6 30 25 20 21.7 (%) 15 14.0 12.6 11.9 10 5 2.1 0 Increase of labour cost Cannot secure labour Increasing paperwork Decline of productivity Employment levy hike Cost increase of investment in automation (Source)"2016 Survey of Japanese Companies in Malaysia by JACTIM/JETRO" Others 37.8% of Japanese companies are facing the issue of rise in labour cost. 33.6% of Japanese companies are facing the issue of cannot secure labour
Labor issues faced by Japanese Companies in Malaysia freeze on new hire of foreign workers increase in the levy on foreign workers minimum wage Automation may not always solve the problem of labour. Companies still have to employ workforce in order to maintain the operations even if automation is increased Companies still have to employ workforce in order to maintain the operations even if automation is increased (e.g.) product inspection : The yield ratio using sensor inspection is lower than that of human-eye inspection. There is only so much that automation can handle in high-mix low-volume production. (e.g.) product inspection : The yield ratio using sensor inspection is lower than that of human-eye inspection.
Summary JACTIM FOUNDATION set up in 1994 (contributing to Malaysian cultural, social and educational development) 24 Projects, 6,045,250 Ringgit (As of April 2016) (e.g.) MJIIT :Malaysia-Japan International Institute of Technology We are not committed only monetary investment but are very keen in nurturing talented young people in Malaysia
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