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Sentiment of Japanese firms in Malaysia to improve in H1 2022

Sentiment of Japanese firms in Malaysia to improve in H1 2022

04 Nov 2021

Business sentiment among Japanese companies in Malaysia is forecast to improve in the first half of 2022 (H1’22) based on a survey by the Japanese Chamber of Trade and Industry Malaysia (Jactim).

According to the survey, which is conducted bi-annually, the business sentiment diffusion index is projected to improve to 3.1 points in H1’22, after being in negative territory since H2’18.

Jactim general adviser cum Japan External Trade Organisation (Jetro) Kuala Lumpur managing director Mai Onozawa (pix) said many Japanese companies are positive about Malaysia’s outlook, premised on the global recovery, and plan to continue their business activities in Malaysia.

Jactim’s survey on business trends in Malaysia in H2’21 was conducted in September, involving 552 Jactim member companies, including 120 companies from the manufacturing sector and 71 companies from the non-manufacturing sector.

“In the survey, many respondents pointed out that production activities are gradually resuming following the relaxation of the Malaysian government’s restrictions on social and economic activities, in line with the rising vaccination rates,” Onozawa told Bernama in an interview recently.

The extension of the sales and service tax exemption for new car purchases to up to June 2022 has supported the automotive industry, she said.

“As for the services sector, especially the manufacturing-related services, the government’s move to ease restrictions with the transition to Phase Four of the National Recovery Plan has galvanised manufacturing companies to increase their production activities.

“This led to an increase in demand for related services such as import/export, sales and transportation of related products,” she said.

Onozawa noted that business sentiments are low in H2’21 due to the economic downturn and low operating rate caused by the prolonged lockdowns.

She said labour shortage has been a prevailing issue even before the Covid-19 pandemic, as large-scale manufacturing industries have been finding it difficult to secure a sufficient number of workers.

“With the suspension of new hiring of foreign workers from June 2020, in addition to the Covid-19 infection countermeasures, many companies said the number of general workers they were able to secure had decreased significantly.

“Japanese companies are actively recruiting Malaysian workers, but the turnover rate is very high, particularly for companies located in areas with a high concentration of companies, such as Selangor and Johor,” she said.

To continue their economic activities in Malaysia, she stressed that Japanese companies need highly skilled human resources such as engineers and production managers. However, the number of talent is insufficient and the companies have difficulties in hiring them.

“It is also important to secure a stable minimum workforce. We would like to request the Malaysian government to provide more opportunities to train Malaysian workers to promote recruitment and resume hiring new foreign workers where it is needed,” she added.

According to Onozawa, many Japanese companies said production has not been sufficient to meet demand due to the labour shortage.

“Additionally, some companies are finding it difficult to procure parts and materials from both domestic and overseas sources due to problems such as disruptions in marine transportation.

“As these issues cannot be resolved immediately, companies are expecting the situation of excess demand to continue for the time being,” she said.

Given the current situation, Jactim has urged the government to create a business environment that will allow foreign companies to continue their economic activities in Malaysia for a long time in a win-win situation.

“We hope that the government will continue to support the stable operation of existing companies.

“In light of the trade conflict between the United States and China, it is also important to have a conducive investment environment to get companies looking for new investment destinations to invest in Malaysia,” she said.

Onozawa highlighted that many of the Japanese companies which are operating in Malaysia have been in business for more than 30 to 40 years, and all of them are keen to continue their business activities in Malaysia.

She commended the government for its move to extend the Additional Reinvestment Allowance, saying that this would be beneficial for both foreign companies and Malaysia to attract new investments.

Onozawa also emphasised the importance of a clear carbon-neutral policy.

“From the perspective of achieving both zero emissions and ensuring a stable energy supply in the journey towards zero emissions, it is necessary to continue supporting the current conventional power generation system using existing fossil fuels using transition finance.

“At the same time, an immediate and clear policy to support the goal, such as subsidies and preferential measures for carbon-free alternatives, is also necessary,” she added.

Source: Bernama

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