Business sentiment of Japanese firms to improve next year

FILE PHOTO: People walk in Shibuya shopping area, during a state of emergency amid the coronavirus disease (COVID-19) outbreak in Tokyo, Japan August 29, 2021. REUTERS/Androniki Christodoulou

KUALA LUMPUR: Business sentiment among Japanese companies in Malaysia is forecast to improve in the first half (H1) of 2022 based on a survey by the Japanese Chamber of Trade and Industry Malaysia (Jactim).

According to the survey, which is conducted bi-annually, the business sentiment diffusion index is projected to improve to 3.1 points after being in the negative territory since H2’2018.

Jactim general adviser cum Japan External Trade Organisation Kuala Lumpur managing director Mai Onozawa said many Japanese companies are positive about Malaysia’s outlook, premised on the global recovery, and plan to continue their business activities in Malaysia.

Jactim’s survey on business trends in Malaysia in H2’2021 was conducted in September, involving 552 Jactim member companies, including 120 from the manufacturing sector and 71 from the non-manufacturing sector.

“In the survey, many respondents pointed out that production activities are gradually resuming following the relaxation of the Malaysian government’s restrictions on social and economic activities, in line with the rising vaccination rates,” Onozawa told Bernama.

The extension of the sales and service tax exemptions for new car purchases to up to June 2022 has also supported the automotive industry, she said.

“As for the services sector, especially the manufacturing-related services, the government’s move to ease restrictions with the transition to phase four of the National Recovery Plan has galvanised manufacturing companies to increase their production activities. This led to an increase in demand for related services such as import/export, sales and transportation of related products,” she said.Onozawa noted that business sentiments were low in H2’2021 due to the economic downturn and low operating rate due to the prolonged lockdowns.

She said labour shortage has been a prevailing issue even before the Covid-19 pandemic, as large-scale manufacturing industries have been finding it difficult to secure enough workers.

“With the suspension of new hiring of foreign workers from June 2020, in addition to the Covid-19 infection countermeasure, many companies said the number of general workers they were able to secure had decreased significantly.

“Japanese companies are actively recruiting Malaysian workers, but the turnover rate is very high, particularly for companies located in areas with a high concentration of companies such as Selangor and Johor,” she said.

To continue their economic activities in Malaysia, she stressed that Japanese companies also need highly skilled human resources such as engineers and production managers, however, the number of talents is insufficient and the companies have difficulties in hiring them.

“It is also important to secure a stable minimum workforce. We would like to request the Malaysian government to provide more opportunities to train Malaysian workers to promote recruitment and resume hiring new foreign workers where it is needed,” she added.

According to Onozawa, many Japanese companies said that production has not been sufficient to meet the demand due to the labour shortage.

“Additionally, some companies are finding it difficult to procure parts and materials from both domestic and overseas sources due to problems such as disruptions in marine transportation.

“As these issues cannot be resolved immediately, companies are expecting the situation of excess demand to continue for the time being,” she said.

Given the current situation, Jactim has urged the government to create a business environment that will allow foreign companies to continue their economic activities in Malaysia for a long time in a win-win situation.

“We hope that the government will continue to support the stable operation of existing companies.

“In light of the trade conflict between the United States and China, it is also important to have a conducive investment environment to get companies looking for new investment destinations to invest in Malaysia,” she said.

Onozawa highlighted that many of the Japanese companies which are currently operating in Malaysia have been in business for more than 30 to 40 years, and all of them are keen to continue their business activities in Malaysia.

She also commended the government’s move to extend the additional reinvestment allowance, saying that this would be beneficial for both foreign companies and Malaysia to attract new investments.

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