Japanese firms in Malaysia confident under Mahathir Mohamad’s new government

Japanese companies in Malaysia are closely watching the moves of leader Mahathir Mohamad, who many believe will attempt to break the country’s economic dependence on China following the resurgent politician’s shock election win.
Some 1,400 Japanese companies have a presence in Malaysia, according to the Foreign Ministry.
The manufacturers, mainly electronics makers, began operating there in the late 1980s, initially seeking cheap labor. The services industry followed later as local incomes rose.
Cosmetics maker Shiseido Co. said it expects no major impact on sales from the change in government.
“Japanese cosmetics are highly evaluated,” CEO Norio Tadakawa said.
If the new government delivers on its pledge to abolish the goods and services tax, consumption may rise. But if the country’s finances deteriorate after the tax cut and its currency weakens as a result, import prices could jump, negatively affecting Japanese companies in the services sector.
Mahathir oversaw Malaysia’s economic development under his Look East policy, learning from Japan and other countries when he was prime minister from 1981 to 2003.
During the election campaign, he criticized the previous government for its focus on economic ties with China.
In the bidding for a plan to build a high-speed railway connecting Kuala Lumpur with Singapore, a consortium of Japanese companies including Sumitomo Corp., East Japan Railway Co. (JR East), and Hitachi Ltd. is expected to compete with Chinese companies.
Some Japanese firms believe the change of government will work in their favor when the bidding begins. But the new government may also put priority on protecting domestic industries to strengthen its support base.
“Effects from the change of government need to be thoroughly examined,” a Japanese energy industry executive said.

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