Japanese service sector eyes expansion in Malaysia

Japanese companies in the service sector are setting their sights on Malaysia for increased investment, Malaysian National News Agency (Bernama) reported on Sunday.

Koichi Takano, managing director of Japan External Trade Organisation (Jetro), said that Japanese restaurants are expanding in Malaysia, and legal firms are collaborating with local partners to open branches.

This surge in interest is fuelled by a combination of factors, including Malaysia’s:

Attractive business environment:  stable political climate, good English proficiency among the population, and its position as a gateway to the Islamic market.

Fewer natural disasters: compared to other countries in the region.

Takano highlights a shift in investment focus, with established Japanese manufacturers primarily looking to expand existing operations rather than build new ones.  However, the service sector is witnessing a wave of new investments.

A recent Japanese Chamber of Trade & Industry Malaysia (Jactim) and Jetro survey indicates that some Japanese non-manufacturing companies see Malaysia as a potential regional hub.

They anticipate rising profits in 2024 due to improved business sentiment compared to 2023. Additionally, the survey found a strong commitment to decarbonisation efforts among Japanese firms in Malaysia.

The survey highlighted areas where Japanese companies want improvement, such as seeking more favourable treatment and flexibility in policy enforcement. This includes tax breaks, incentives for green energy adoption, and a gradual implementation of new regulations.

“Japanese small and medium-sized enterprises have contributed to Malaysia’s society and economic development; they would like some preferential measures,” Takano said.

Japan’s total investments in Malaysia reached $1.863 billion during the last year/

With total investments reaching $1.863 billion in 2023, Japan remains a significant investor in Malaysia. The growing focus on the service sector suggests a promising future for deeper economic ties between the two nations.