Bigger role for Japan?

RECENT developments in Malaysia's international economic policy must be of interest to Japan.

Prime Minister Datuk Seri Najib Abdul Razak's working visit to China on May 12 was surely watched closely by Japan. Tokyo must be trying to unwrap what lies within this trip with a view to discerning the implications.

Najib was unapologetic about his choice of China as an investment partner and his determination to launch infrastructure projects in Malaysia with its assistance.

If China's past records are to be set aside, it does not matter whether China, the US, or even Zimbabwe build Malaysia's mega projects; all would be fine so long as the financing is in Malaysia's favour, jobs are created for Malaysians and the economy grows. But nothing is as straightforward as that. Besides, China's ambitions in the global landscape are clear – China seeks to establish a centre of gravity of its own – and this alters the complexion of China's grand initiatives as it also tinges Malaysia's attempts to tilt closer to the Eastern giant.

Why does Malaysia's tilt to China matter to Japan? For one, Japan has had a long and comfortable relationship with Malaysia. Japan has been a partner in Malaysia's development history. Right from the late 1950s, Japan has assisted Malaysia in innumerable ways through its many agencies, the Japan International Cooperation Agency being one of them.

Japanese foreign direct investment in Penang in the 1960s helped establish the country as a hub for the electrical and electronics industry. Japanese manufacturers in the E&E and automotive sectors have been committed investors in Malaysia. The "Look East" policy that Tun Dr Mahathir Mohamad heralded marked the zenith of Malaysia-Japan ties. The extent of Japanese involvement in Proton may have come as a disappointment to Mahathir, but that did not mar the relationship. In the context of this background, it is only natural that they be worried if their business interests can continue to enjoy good days.

Following the turn of the century Japan may have turned towards China and Africa. This is not to say that Malaysia was discarded; it may have lost the spotlight during that period since there were more rewarding and fresh opportunities in other countries.

But now the situation has changed. The question for Japan is whether it has changed too much.

Malaysia is tightly caught up with China. Innumerable joint ventures are in the works. Some exciting and possibly high yielding projects have been signed between Malaysia and China, with, perhaps, more to follow. A project like the Digital Free Trade Zone is not within Japan's expertise on the software side, but the communication, electrical and electronic aspects are up its alley. Other infrastructure projects could be undertaken by Japanese companies.

In many areas its expertise is as good as that of China's, maybe with a longer history of experience. It was reported that Japan failed to clinch the Bandar Malaysia deal. However, it is expanding its efforts to win the proposed 350km Kuala Lumpur-Singapore High Speed Rail.

The new kid on the block could grapple with the technological giant and bring it down on the mat. Japan will have to review its policy towards Malaysia. It will have to be sprightly in its moves.

Some of the strategies that China can follow in its dealings with Malaysia are ruled out for Japan because it has to face a more demanding parliament. But other actions are possible and they must be taken up with more verve. This is necessary as the competitive pressures increase.

Japan must take and be seen to be taking a more active interest in Malaysia, guiding its path to developed country status. There is no doubt that JICA, for instance, has assisted Malaysian companies. New avenues must be identified that are in line with national development goals. The needs of the private sector, specifically the SME sector, have to be identified and their requirements served.

Japanese companies can contribute towards technology transfer, technology upgrading and research and development. This can be done by establishing research and high-tech training centres. It will have to serve defined markets, for instance, the automotive or air-condition industries.

Collaboration with third party countries will also be very useful. Japan can collaborate with India, for example, to provide expertise and skill-upgrading in space technology. Joint ventures with Australia can, in a similar vein, be explored.

At a softer, but no less effective level, Japan can set up research centres in Malaysia that will explore science and technology policy, national security, trade and economic cooperation.

Japan's involvement in Malaysia has to change course. It is seen as a passive executor of US policies. This is insufficient; it has to be seen as having a mind of its own and having an interest in guiding Malaysia towards developed country status. The image of Japanese companies in Malaysia is one of MNCs that are here for their self-interest. The corporate social/national responsibility component has to be stepped-up and given more prominence.

It is only with greater presence and one that is more visible that Japan will be able to stand out as a partner in Malaysia's development.
The competition with China cannot be won only with lower prices; there are other aspects that have to be tapped.

Dr Shankaran Nambiar is author of Malaysia in Troubled Times. Comments: