KUALA LUMPUR: The RM1.9 billion in potential trade deals with Japan will boost market confidence in Malaysia, said experts.

Economist Professor Emeritus Dr Barjoyai Bardai said Prime Minister Datuk Seri Anwar Ibrahim's announcement in Tokyo was timely as the rate of incoming investments had been slow.

Barjoyai said Malaysia's semiconductor sector was significant as "essentially, we have what investors are looking for due to decades worth of expertise".

However, he said, there should be a shift towards higher-value sectors, and the focus should be on renewable energy.

"Malaysia, being the largest producer of solar cells in the world, and states like Sarawak working its way to become a leading player in the hydrogen economy, should tell investors the area of growth that the country is heading towards," said Barjoyai.

He said only three per cent of companies in Malaysia were substantial enough to drive development, but the remaining 97 per cent of small, medium, and micro enterprises should not be overlooked.

"We don't want the smaller businesses to remain stagnant, hence the need for the government to further push these businesses to advance and meet new industrial standards is the top priority so they are not left behind."

Khazanah Research Institute chairman Dr Nungsari Ahmad Radhi said investing in developing local talen should be part of building a conducive economic ecosystem.

He said the declining enrollment in science, technology, egineering and mathematics subjects in schools and universities was another a critical issue for the government to address in producing skilled workers and foster local firms linked to these sectors.

Anwar, at a press conference after a bilateral meeting with Japanese Prime Minister Fumio Kishida, said Malaysia could look forwards to RM1.4 billion in potential invesments from Japan, while exports to the country were set to go up by another RM550 million.

He said the new investments would require further discussions with the Investment, Trade and Industry Ministry (MITI) and relevant agencies.

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz later told reporters that six of the companies that already had a presence in Malaysia and one company looking to invest in the country.

On the maturation of Malaysia-Japan trade relations, Barjoyai lauded the move as a way to rely less on Western economies.

"It's a progressive way forward. Apart from China, Japan remains a substantial player, along with South Korea, Taiwan, and Hong Kong," he added.

Political and international relations expert Professor Dr Azizuddin Sani said Japan had been Malaysia's second-largest trading partner since 2022 and the long-term relationship remained "valuable for us".

"Similarly, Malaysia's strategic location in Southeast Asia along crucial trade routes between the East and the West makes it attractive for businesses to continue fostering such confidence," said Azizuddin.

Among the key factors for favourable investment policies to work, he said, included the use of "soft power that both the country and Japan has forged".

"I see this as a positive development for us. To a greater degree, the investments and exports will not only benefit the country, but drive increased attention within the region as Malaysia gears up for the Asean chairmanship next year," he added.

https://www.nst.com.my/news/nation/2024/05/1054914/trade-deals-japan-will-boost-confidence-malaysia-say-experts