DESPITE the extraordinary challenges posed by the Covid-19 pandemic, there is much to look forward to as far as Japan’s economic relations with Malaysia is concerned, says Hiroshi Oka (pic).
The enterprising Japanese Ambassador to Malaysia points to what he says is a “solid basis” upon which relations between both countries are built on, and the bright prospects to steer things forward.
Saying that Japan will continue to work with Malaysia as the lead country in the field of health within Asean, the envoy also speaks of how supportive Malaysia has been in his country’s hour of need, citing the urgent importation of rubber gloves and Personal Protective Equipment (PPE) from Malaysia to equip and protect Japanese frontliners.
Pandemic sentiments and the economic scars aside, the envoy believes the state of business relations between both countries is set for a resurgence, saying it is private businesses that will lead the post Covid-19 economic recovery in a sustainable manner.
Oka reveals that a survey showed that over a third of Japanese firms in Malaysia are considering expanding their operations.
“I’m glad to see various investments by Japanese companies continuing despite the challenging Covid-19 pandemic, ” he adds.
In a wide-ranging interview with Starbiz, Oka speaks of the preparations to host the Tokyo Olympic Games in July, his government’s efforts to combat the coronavirus and its recently-started inoculation drive, Japanese investments in Malaysia and the wide horizon ahead to strengthen relations between both countries.
Q: The Tokyo Olympic Games has been billed as a celebration of humankind over the coronavirus. Can Japan defy the odds for the Games to open as planned on July 23?
A: Starting with the opening ceremony to take place on July 23 this year, the schedule and venues of the Tokyo Olympic Games (Tokyo 2020) have already been fixed. Japan is now advancing preparations for hosting the safe and secure Tokyo 2020 by working closely with all the relevant organisations and parties, including the International Olympic Committee (IOC), and taking all necessary measures against Covid-19.
Q: Are your officials looking at vaccination as a potential saviour of the Games, to ensure Tokyo 2020 can get off safely?
A: Policies were announced last December to address the challenges posed by Covid-19. For athletes, measures to protect them from Covid-19 infection will be taken at each phase from their entry into till their departure from Japan.
These measures are elaborated in the Tokyo 2020 playbook for athletes which was released in February jointly by the Tokyo Organising Committee for Tokyo 2020, IOC, and the International Paralympic Committee (IPC). Safety measures for the spectators, including upper limit of their number and guidelines for foreign tourists, will be decided on by this Spring considering the infection status inside and outside of Japan.
The start of vaccinations in the world is undoubtedly encouraging. According to the Minister for Tokyo Games in Japan, comprehensive counter-measures against Covid-19, including conduct of tests and behavioural management, are being considered for Tokyo 2020 to be held in a safe and comfortable manner without making vaccination a necessary prerequisite.
Three Host Towns in Japan will welcome the Malaysian athletes and we look forward to supporting them to be fully prepared for the Games. My heartfelt wish is for all the Malaysian athletes, including the promising badminton players, to achieve great success at Tokyo 2020, and make Tokyo 2020 a historic Olympics.
Q: Japan only recently started its Covid-19 inoculation drive, administering the Pfizer vaccine to healthcare workers from selected hospitals across the country. But there is a reported shortage of special springes, with manufacturers struggling to ramp up production. How is this issue being addressed?
A: In Japan, vaccination with Pfizer’s vaccine began from Feb 17. Japan aims to secure the necessary amount of vaccines to cover all citizens by the first half of 2021, and the vaccination programme has already started with high-risk groups, including frontline healthcare workers, the elderly and those with underlying medical conditions. As of March 4,5pm, 39,174 people in Japan have been vaccinated.
With regard to the Pfizer vaccine, medical institutions have started vaccination on the basis of five doses per vial, by using the syringes and needles normally distributed in Japan. In addition, in light of the fact that “special syringes” will enable six doses per Pfizer vaccine vial, Japan is now planning to secure these “special syringes” through Japanese companies such as Nipro and Terumo.
Japan has a contract with Pfizer for the number of doses of vaccines, not the number of vials, so there will be no problem in securing the required doses of vaccines.
Q: Japan’s daily coronavirus cases have been on the decline after peaking in early January, but Tokyo and several prefectures remain under a state of emergency. Can you tell us about your government’s efforts to check the spread of the virus, without resorting to tough lockdown measures?
A: The state of emergency in Japan has been partially lifted as a result of the stabilisation of infection status and is now limited to Tokyo and neighbouring three prefectures only.
Even under the state of emergency, the government of Japan has not resorted to strict lockdown measures. Instead, the government has asked the people to change their behaviour, such as avoiding the “3C” (close conversation” in “closed spaces” and “crowded places”), in addition to strictly keeping to daily habits of hand-washing and wearing masks. Additionally, as specific measures against infection under the state of emergency, people are asked to refrain from going out unless necessary and businesses are asked to shorten employees’ working hours at the office by promoting work from home.
It was not until February 13 2021 when the law was amended to enable penalties of up to 200,000 yen (approximately US$2,000) be imposed on restaurant operators for violating the order of shortening opening hours.
Q: And what about efforts to maintain employment and sustain businesses? Japan has launched three economic stimulus packages so far.
A: Protecting people from infection and safeguarding their livelihoods in the face of the pandemic is a common challenge for all countries. In 2020, the Government of Japan approved three consecutive supplementary budgets, including new fiscal spending totalling 38 trillion yen (equivalent to 7% of the GDP) to sustain employment and businesses.
These supplementary budgets have provided various support measures, including the provision of benefits to support the continuation of business, expansion of employment adjustment subsidy to support part of the payment of absence allowance to workers by employers, provision of new subsidies to help parents take leave when primary schools are closed temporarily, and support for the payment of tenant rent.
The Japanese government has also provided support to households, including the payment of rent through the Livelihood Security Benefit, leave support payments for workers who have not been paid leave benefits for Covid-19 and the provision of loans for living expenses through the Emergency Small Loan Fund and General Support Fund.
Thanks to these support measures, Japan’s unemployment rate has remained at a low level of 2.8% on average over the last year and has been on a downward trend from last year’s peak - 3.1% in October - to the current level - 2.9% in January this year.
Q: What is the level of cooperation between Japan and Malaysia in combating Covid-19? Recently, your government presented Personal Protective Equipment (PPE) to Malaysia’s National Disaster Management Agency (Nadma).
A: Japan and Malaysia have cooperated closely as strategic partners by extending maximum cooperation to help each other.
In the immediate aftermath of the Covid-19 pandemic in Malaysia, Japan swiftly provided assistance including provision of PPEs and food to the socially vulnerable population in Malaysia through international organisations, namely, IFRC, UNICEF and UNHCR.
Japan also provided Avigan tablets for clinical trials last October and signed an agreement with the Malaysian government to provide advanced medical equipment to support the diagnosis and treatment of Malaysians in January. In February, Japan provided PPE through Nadma to be promptly delivered to frontliners. In addition, graduates of the Malaysia-Japan International Institute of Technology (MJIIT), have helped the Malaysian government formulate SOPs in Malaysia.
Regional efforts are also essential to combat infectious diseases. From this perspective, Japan supports and encourages the establishment of the Asean Centre for Emerging Diseases and Public Health Emergencies to enhance the capacity of Asean countries to cope with infectious diseases, including Covid-19.
The establishment of the Centre was celebrated at the Asean-Japan Summit in November last year. Japan will continue to work with Malaysia as the lead country in the field of health within Asean. Through these assistances combined, Japan has already provided more than US$60mil to support Malaysia.
In addition, Japan is contributing US$300 mil to the GAVI and COVAX Facility, an international cooperative framework to support the development and fair and affordable supply of vaccines globally.
Malaysia also has been supportive of Japan. The urgent importation of rubber gloves and PPEs have played a vital role in protecting the Japanese frontliners. The Malaysian government has also permitted the export of medical equipment and PPEs manufactured by Japanese companies in Malaysia. It gives me great pleasure to witness Japanese companies contributing to the supply of PPEs in Malaysia as well as to the position of Malaysia as a hub in the supply chain of medical equipment.
Q: Japan’s economy shrunk by 4.8% last year due to the Covid-19 pandemic, despite having surged in the fourth quarter. Analysts say they expect growth this year to be fragile. Can Japan lead the way in Asia for a global economic recovery?
A: The real GDP for the Q4,2020, expanded by 3% (12.7% on an annualised basis), marking the second consecutive quarter of positive growth. This is due to the increase in private consumption (+2.2%) and exports (+11.1%) owing to the recovery of the global economy and reflecting Japan’s current economic situation, which shows signs of recovery.
Thanks to the Comprehensive Economic Measures, whose overall scale is valued at US$2.21 trillion (equivalent to 43% of Japan’s GDP) and is the second largest in the world only after the United States according to a recent IMF report, the recovery trend of the Japanese economy will continue. The real GDP of Japan is expected to grow by approximately 4.0% in FY2021.
In addition to sustaining the fragile economic recovery by creating immediate demand, Japan also prioritises developing new technologies which will be the key to sustainable economic growth in the post Covid-19 era.
I believe the key is to go green and digital. For instance, the latest stimulus package includes 2.8tril JPY (US$26 billion USD) in initiatives targeted at reducing carbon emissions and boosting the adoption of digital technology.
Covid-19 crisis is a game changer and fundamentally expanding the frontiers of the green and digital economies. Japan is determined to rev up these two engines to lead global economic growth.
Last year, Prime Minister Suga announced Japan’s new policy target to achieve carbon neutrality by 2050 and the government revealed the “Green Growth Strategy” which aims to create a positive cycle of economic growth and environmental protection.
Under the strategy, the government established a green innovation fund, amounting to 2tril JPY (US$19bil), to leverage significant private investments to spur ambitious green innovations. Such green investments are expected to drive economic recovery from the pandemic. I believe Japanese green technologies will contribute to the expansion of green industry and help to drive economic revitalisation in the Asean region.
For instance, one of the priority fields in the “Green Growth Strategy” is the hydrogen industry and Japan is equipped with advanced technologies for hydrogen production and power generation. In Malaysia, Japanese companies, such as Eneos and Sumitomo Corp, and Malaysia’s SEDC Energy, signed an MOU to develop green hydrogen supply networks in Sarawak last October and carry out a feasibility study on the establishment of a supply chain of green hydrogen and marine transportation of liquefied hydrogen.
Japan also has a long record of achievement in developing storage batteries, which are prerequisites for the full electrification of automobiles. Japan will make the most of all these technologies to become a global front runner in the green economy.
It makes sense for Japan and Asean to firmly join hands to weather the Covid-19 crisis, given the stronger economic linkages where Japan’s investments in Asean have now surpassed its investments in China.
Japan and Asean announced the “Asean-Japan Economic Resilience Action Plan” last July, which contains over 50 concrete projects for economic and industrial cooperation.
Japan contributes to driving Asean’s economic recovery by standing firm on free trade and strengthening the resilience of supply chains by adding layers to the existing supply chains as well as supporting businesses related to digital transformation.
It is the private businesses that will lead the post Covid-19 economic recovery in a sustainable manner. Therefore, the Regional Comprehensive Economic Partnership (RCEP), signed by 15 countries including Malaysia and Japan last November, has enormous significance in encouraging regional trade and investment. RCEP’s early entry into force will significantly contribute to regional economic recovery.
Japan is now a party to the two major economic partnership agreements, namely the CPTPP and RCEP, and also entered into economic agreements with the EU, US and UK bilaterally. As a result, a free economic zone that covers 80% of global GDP is emerging with Japan as its hub. We will continue to work together with our partners such as Malaysia to ensure the free global movement of people, goods and capital.
Q: When do you expect cross-border travel between Japan and Malaysia to resume? What is the latest on the suspension of single and multiple entry visas into Japan?
A: Resuming cross-border travel is essential for facilitating economic recovery. From this standpoint, Japan had been in discussion with partner countries on measures to resume cross-border travel and Japan had initiated the “Residence Track” with Malaysia last September, which requires the 14-day quarantine period.
In addition, Japan opened the “Business Track” with some countries, which exempts the 14-day quarantine period and allows immediate activities after entering Japan within certain conditions.
Unfortunately, the new entry of foreign nationals into Japan, including through the above mentioned bilateral tracks, has been temporarily suspended globally following the declaration of the state of emergency in some prefectures of Japan.
It is my sincere hope that “Residence Track” with Malaysia can be resumed soon once the spread of Covid-19 is brought under control. We will also continue discussions with the Government of Malaysia on “Business Track” with Malaysia to prepare for a further improvement of the situation.
Q: Onto Japanese investments in Malaysia. Can you tell us about the progress of business relations between Japanese companies and Malaysia?
A: The Look East Policy (LEP) attracted waves of investment from Japan and around 1,500 Japanese companies are now operating in Malaysia. In the manufacturing sector alone, Japanese companies employ more than 340,000 employees.
In 2019, Japan was the largest investor in Malaysia, accounting for more than one-third of foreign investment flow and the third largest investor in terms of FDI stock and the second largest investor in the manufacturing sector.
While Japanese companies in Malaysia have been severely affected due to sluggish demand and disruption of the supply chain caused by the pandemic, the situation is improving as they are now allowed to operate fully as long as they strictly observe the SOP while the global economy gradually recovers.
As a result, sales of Japanese companies in the manufacturing industry, for example, are on a recovery trend and the sales of some companies have reached the same or even higher level over the last year. I would like to appreciate the Malaysian government for the approaches it has taken against Covid-19.
Q: How do you see the performance of Japanese companies in Malaysia? What is the feedback from them over the past year?
A: Malaysia remains an attractive investment destination for Japanese companies, as is shown in the annual survey on corporate activities conducted by Jetro last December.
The survey found that roughly 37% of Japanese companies operating in Malaysia are eagerly considering to expand their operations in Malaysia, whereas only 9% are thinking of downsizing their operations.
I’m glad to see various investments by Japanese companies continuing despite the challenging Covid-19 pandemic. In fact, in recent years, in addition to the traditional focus of E&E, investments in the high value-added sectors, such as medical devices segment, and services sector including the logistics and digital segments have also increased.
In the manufacturing sector, Nippon Electronic Glass has made new investments worth RM200mil in Selangor to expand its factory capacity to produce glass tubing for pharmaceutical use. The leading global mobility systems and components supplier, Denso announced that it will invest RM160mil to expand its production capacity of semiconductors in Selangor.
In the logistics segment, Daiwa House Industry has announced its plan to build a multi-tenant logistics facility in Selangor with an investment of approximately RM42mil, and Sankyu, which works for construction of plants and logistics, has begun to construct its first overseas human resources development centre in Johor.
Malaysia is also attracting Japanese digital companies to its shores. For example, Allm, a Japanese pioneering ICT company, has established its first South-East Asia office in Malaysia in January to provide remote medical services with the support of Japanese and Malaysian government agencies.
Putting in place an enabling environment, such as expanding special reinvestment allowance and speeding up investment approval including for incentives, will facilitate foreign investment. I am happy to continue working closely with the Malaysian government to increase investments from Japan.
Q: You recently held a virtual conference with the President of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM). How did that go?
A: I am pleased that many Japanese companies in Malaysia have developed such close business relationships with Malaysian Chinese companies and this cooperation is considered vital for the success of Japanese companies. Japanese companies attach great importance to human resources development and they have eagerly transferred their technologies to Malaysian Chinese companies that are part of their supply chains, solidifying the mutual trust and contributing to enhancing the competitiveness of the overall Malaysian economy.
The online meeting with the ACCCIM president Tan Sri Ter Leong Yap, was exciting and I expressed my gratitude for the close cooperation between Japanese companies and ACCCIM member companies and also expressed my deep appreciation to him for working with Japanese companies to reach out to the Malaysian government as the current president of the National Chamber of Commerce and Industry of Malaysia (NCCIM).
Tan Sri Ter and I have agreed to further strengthen the business relations between Japanese and Malaysian Chinese companies and to cooperate to address common challenges such as human resource development and exploring business expansion in collaboration with Jetro and Jactim.
Q: Can you tell us about some of the latest initiatives being undertaken by the Japanese International Cooperation Agency (Jica) in Malaysia?
A: As a strategic partner for Malaysia, Japan has continued to cooperate with Malaysia to support your economic growth since the 1960s mainly in two areas - social infrastructure development and human capacity development.
You can find many footprints of Japan’s development throughout the country. They include development of ports, including Bintulu port, power plants like Port Klang thermal power station, transport infrastructure such as the KLIA Terminal 1, and water resource infrastructure, for example the Pahang-Selangor Water transfer tunnel which is the first inter-state water tunnel in Malaysia and the longest in Asean. I am proud that all these Jica projects are quality infrastructure and significantly contributed to the industrial development of Malaysia.
To support Malaysia’s economic growth, Japan now puts its focus on upskilling the local talent. It is one of the important pillars of cooperation under the LEP and about 20,000 Malaysian trainees have been invited to Japan for training.
These are examples of Japan’s cooperation for capacity development - at the Japan-Asean Summit in November 2020, the leaders agreed that Japan will support the implementation of Asean Outlook for Indo Pacific (AOIP) through cooperation in four areas; maritime security, quality infrastructure, SDGs and strengthening economic resilience.
Japan and Malaysia are both maritime nations and to help ensure safe and secure maritime shipping, Japan has supported capacity building of MMEA since its establishment in 2005 by continuously dispatching Jica experts and providing two patrol vessels to MMEA in 2017.
In education and human capacity development, Japan has supported the establishment of the MJIIT in 2011 as the symbol of cooperation under LEP. Nine Japanese professors at MJIIT, sharing state-of-the-art Japanese engineering expertise and more than 1,000 students have graduated from the institute.
Now a historic plan is underway to establish a branch campus of the University of Tsukuba in Universiti Malaya which will be launched in 2023, as the first ever Japanese university overseas branch. This will enable Japan to contribute towards enriching university education in Malaysia.
I see a wider horizon lying ahead to strengthen our friendship in all the fields. Next year is the 40th anniversary of the LEP since its launch in 1981. The LEP has always been the guiding light for our relations and we would like to celebrate the 40th anniversary with Malaysia to appreciate the achievement and explore cooperation in the future.