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Japanese firms expecting operating profit in Malaysia

Japanese firms expecting operating profit in Malaysia

21 Feb 2023

A survey by the Japan External Trade Organisation (Jetro) found that the percentage of Japanese companies in Malaysia expecting an operating profit has been rising, from 50.0 per cent in 2020 to 59.7 per cent in 2021 and 63.0 per cent in 2022.

“This showed an increment for the second consecutive year as business performance continues to recover,” it said, citing its “FY2022 Survey on Business Conditions of Japanese Companies Operating Overseas, Asia & Oceania, A Comparison Among Six Asean Countries and the Trends in Malaysia.

”The survey noted that the forecast of operating profit for 2023 showed that the percentages for those expecting a deterioration significantly decreased in all six Asean countries.

“In Malaysia, the ‘improved’ percentage increased slightly to 47.4 per cent, while the ‘deteriorated’ percentage decreased by 12.5 percentage points from 19.9 per cent to 7.4 per cent,” Jetro reported. 

On the business development direction in the next one to two years, 48.4 per cent of Japanese companies in Malaysia said they would expand, a 5.2 percentage point increase from 43.2 per cent in the previous year. 

It said the rate of increase was the largest among the six major Asean countries.

Labour costs within the manufacturing sector in Malaysia were 21.1 per cent, and material costs accounted for 58.5 per cent. 

Compared with the 2019 survey, Malaysia was the only country among the six major Asean countries with a decline in its material cost ratio.

Meanwhile, the positive evaluation of Malaysia’s business environment stood at 60.5 per cent, with respondents citing ease of language and communication and living environment for expatriates as advantages.

Labour costs, visa/work permit procedures, and the turnover rate level were cited as risks. Notably, a high percentage of companies report “employee retention rate” as a management problem.

The survey also noted that “within the six major Asean countries, Malaysia has the highest number of companies that answered that they have numerical targets related to decarbonisation, at 23.1 per cent.”

“Issues cited include increased costs, unclear government policy, and low awareness. There are also voices that view the lack of incentives for decarbonisation as an issue,” it said.

It further noted that awareness of human rights issues in supply chains was high in Malaysia among the six major Asean countries, with 65.7 percent recognising it as a management issue. 

The findings, which marked its 36th survey since 1987, were carried out from Aug 22, 2022 to Sept 21, 2022.

The survey included Vietnam, Thailand, Singapore, Indonesia, Malaysia, and the Philippines.

Source: Bernama