Over a third of Japanese companies in Malaysia keen to expand — Jetro survey

Over a third of Japanese companies in Malaysia keen to expand — Jetro survey

12 Mar 2021

Just over a third — or 36.1% — of Japanese companies in Malaysia surveyed by the Japan External Trade Organisation (JETRO) have expressed an intention to expand in the next one to two years, especially in the food, precision medical devices and transportation industries.

JETRO said the poll, which covered Japanese firms in 20 countries/ regions, found that this represented the smallest rate of decline (-6.7%) among the six participating ASEAN countries compared with the 2019 survey.

“In particular, expanding function for ‘Production of high value-added products’ at 44.4% is the highest among the six ASEAN countries.

“Food as well as precision/medical devices in the manufacturing sector, and transportation in the non-manufacturing sector have exceeded 60% with high intention for expansion,” it said in a statement today.

The Philippines (-17.7%) and Vietnam (-17.1%) recorded the highest decline in “expansion”, according to the 2020 JETRO Survey on Business Conditions of Japanese Companies Operating Overseas (Asia and Oceania), which was conducted from Aug 24 to Sept 25 last year.

JETRO received valid responses from 5,976 companies out of the 14,399 surveys sent out. In Malaysia, the survey was sent to 946 Japanese companies and received valid responses from 257.

The organisation said electrical and electronics, the primary industry in Malaysia, had an “expansion” rate at 38.3%, higher than the overall average for Malaysia. The same industry in Vietnam and the Philippines showed strong intentions for expansion as well.

With regard to the business normalisation period post-COVID-19, Malaysia had the highest percentage of companies at 11.2% which answered that their businesses “are already back to normal” at the time of the survey.

As for procurement rate, the survey revealed that within the ASEAN region, it was relatively high in Singapore and Malaysia. In Indonesia, Singapore, Thailand and Malaysia, nearly 50% of local procurement were sourced from local companies.

Among the six ASEAN countries, Philippines, Vietnam, Singapore and Malaysia are considered “export oriented” while Indonesia and Thailand are “domestic demand-driven”. In particular, more than 20% of Japanese companies in the Philippines and Vietnam were fully exporting their products.

Based on the survey, the majority of Japanese companies in ASEAN expected business to normalise in the second half of 2021 post COVID-19.

“About half of these companies in each country have reviewed their business strategies and supply chains, as well as introduce digital technologies due to COVID-19.

“Triggered further by COVID-19, about half of these companies in all six Asean countries are contemplating to introduce digital technologies,” JETRO added.

The percentage of companies facing issues in human resources and cost factors was generally high in each country, it said, adding that Malaysia faced various challenges such as high introduction cost, shortage of talents who were well versed in digital technology as well as lack of understanding among employees.

It also said that while companies in Singapore and Vietnam answered “cash flow has not worsened” due to COVID-19, in comparison, roughly 30% of companies in Indonesia and Malaysia were affected by delayed payments from their business counterparts, which it considered relatively high.

Source: Bernama