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Seize chance to woo Japanese companies leaving China, Malaysia govt told

Minderjeet Kaur FMT Sun, April 12, 2020

A Japanese manufacturing company in Penang. Tokyo has urged Japanese companies in China to restart their businesses elsewhere. (File pic)

PETALING JAYA: An economist has asked Putrajaya to seize the opportunity to attract medium to high-end foreign direct investment from Japanese companies told to exit from China in the wake of the Covid-19 pandemic.

Yeah Kim Leng of Sunway University said these companies will be looking for new bases to restart their businesses after the crisis.

“It should be seen as a silver lining to attract these companies to our shores.

“The competition is going to be stiff, so we have to move quickly to start talks with them,”  the former chief economist with RAM Holdings told FMT.

Yeah was commenting on a report that Japan has earmarked US$2.2 billion of its record economic stimulus package to help its manufacturers shift production out of China, as the pandemic disrupts supply chains between the major trading partners.

The budget includes US$2 billion for companies shifting production back to Japan and US$217 million for those seeking to move production to other countries, according to details of the plan posted online, the South China Morning Post reported.

Yeah said cash rich Japanese companies are expected to move their operations nearer to consumption markets.

“Some may not want to move back to Japan because of its aging population and high cost of production,” he said.

Putrajaya needs to be aware of competitors such as Vietnam, Thailand, Indonesia, the Philippines and Singapore, he said, adding that the government must be proactive to meet the requirements of the Japanese companies.

The key move, Yeah said, will be to step up promotion and promote Malaysia as an ideal investment destination.

“This must be followed by speedy implementation of doing business with ease and giving full assistance to ensure they can start their operations immediately,” he said.

He also urged Malaysia to garner support from Japanese multinational corporations currently based here to entice these companies to restart their operations in the country.

“We must capitalise on the relationships we have with these MNCs,” he said.

Yeah said Malaysia should offer incentives such as tax holidays which other countries would also be offering. He said foreign direct investors would be looking for political stability, good connectivity and availability of land, which Malaysia can offer

However, he said an obstacle would be labour shortage and, because of that, Putrajaya should target medium and high-end investors such as those in electrical, electronics and medical equipment.

“We can provide skills but, for that, we may need to train Malaysians further to upgrade their knowledge,” he said.

Economist Mohd Nazari Ismail of Universiti Malaya said Malaysia must be mindful that there are more favourable locations in terms of cost such as Indonesia, Vietnam, Cambodia and Thailand.

“In fact, many factories have already moved out from Malaysia to go to these locations due to cost considerations,” he said.

Some economists have predicted that Malaysia may face recession this year as almost all crucial sectors slow down because of the pandemic and the movement control order.

On April 3, Bank Negara Malaysia said in its Economic Monetary Review 2019 the nation’s economy could shrink as much as 2% this year.


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