Malaysia Expects 30% More Japanese Investments

Japanese investments in Malaysia this year may rise by at least 30% after the latest survey shows that the business sentiment of the Japanese has continued to trend upwards on the back of gradual improvement in the local economy.

These investments are expected to jump by leaps and bounds if Japanese firms succeed in bidding for the Kuala Lumpur-Singapore High Speed Rail project, estimated to cost around RM60 billion ($14.06 billion), thestar online reported.

“We hope to see a growth of at least 30% in Japanese investments in Malaysia over 2016 in line with our improved sentiment and the higher local GDP growth seen in the first quarter of this year,” said Toshihiko Todokoro, president of Japanese Chamber of Trade and Industry Malaysia last Monday when releasing a business survey result.

The recent business survey conducted by Jactim and Japan External Trade Organization shows that 31.3% of respondents will expand their investments as they see growth potential in Malaysia. But 64.4% of the respondents maintained status quo while only 4.3% have intention to downsize their business.

In the first quarter of this year, Malaysia posted a gross domestic product growth of 5.6%–much higher than the expected average of 4.8% by private sector economists. The services and manufacturing sectors had expanded strongly.

The survey from February 6 to March 31 on 150 Japanese companies operating in Malaysia shows that business sentiment for the first half of this year has improved to negative 8.8 points, from negative 17.8 points in the second half of 2016.

The worst sentiment was seen in the second half of 2015 when business sentiment index recorded negative 26.4 points. The battered sentiment in 2015 had caused Japanese investments in 2016 to shrink to RM3.3 billion, from RM8.5 billion in 2015.

“Our diffusion index for the first half of this year improved dramatically, and further upward trend will be expected in the second half of 2017. The second half of 2015 has hit bottom and now, it is turning into a recovery phase,” said Akira Kajita, research committee chairman of Jactim, when explaining the survey results.

On the back of this optimism, Jactim is projecting that the Malaysian economy will grow more than 5% this year, compared to the Malaysian government’s forecast of between 4.3% and 4.8%.