GEORGE TOWN: Malaysia could lose out in foreign direct investments from Japan if the manpower shortage faced by the manufacturing sector prolongs and coupled with the threat of removal of fuel subsidy by the government, Malaysia may not be on the radar for new investments for Japanese companies.

Japanese ambassador Masahiko Horie said on Wednesday, March 17 these two elements would weigh heavily on FDIs and Malaysia may lose its advantage to other countries.

Speaking to journalists during his visit to Penang here, Horie said these were among the main grouses raised by Japanese companies located here. Also present were consul general Tetsuro Kai and deputy consul general Hiroko Matsuo.

Japan was the highest contributor in terms of FDIs in Malaysia over the past five years, topping the list in 2006 (RM4.412 billion), 2007 (RM6.523 billion) and 2009 (RM7.041 billion). For 2005 and 2008, Japan contributed RM3.67 billion (second on the list) and RM5.60 billion (third), respectively.

Horie said Japanese companies, especially those in the electronics and electrical (E&E) sector were having a hard time employing production operators who were crucial to their operations.

"Since the Malaysian government has disallowed the intake of foreign workers, many Japanese companies are finding it difficult to employ production operators.

"This scenario is not only prevalent in Penang, but also nationwide, and not only limited to Japanese companies," Horie said.

Citing the example of Sony Malaysia in Shah Alam, which had advertised to employ between 1,000 and 2,000 production operators in September last year, Horie said after one day, only 36 locals responded to the advertisements.

"After some assistance from the government, they managed to bring in some foreign workers. One of the companies in Penang wanted to hire 100 workers, they only managed to employ 30.

"This is the same predicament faced by the manufacturing sector all over Malaysia," he added.

Horie said it was understandable that the Malaysian government was keen to move up the value chain in the manufacturing sector, but some processes were not meant to be high-tech and would require labour.

"We have met the ministers of human resources, international trade and industry and the deputy prime minister and explained why the E&E sector needs these operators.

"We are very supportive and we understand the Malaysian government's aspiration to move upwards into a high TECHNOLOGY [ ] and knowledge-based economy but no where in the world can the processes for E&E appliances and products, automobile and audio industries be automated.

"These processes will always be manually operated as it requires patience as the work is mostly repetitive and relatively low-wage income.

"However, these processes are indispensable and without this part of manufacturing, no company can achieve production of first-class high precision products," he added.

On the impending removal of fuel subsidy, Horie said many of the Japanese companies had moved to Malaysia due to the low and attractive prices which enabled them to carry out their operations competitively.

"Now, with this increase looming, many are worried if they would lose their competitiveness to operate in Malaysia," he said. Other grouses raised by Japanese companies in Penang, especially in the manufacturing sector, include the erratic power supply.

Horie said a manufacturer had lamented the frequency of such incidences which, even if it lasted for one or two seconds, would result in huge losses due to the operations being disrupted by at least an hour.

He said due to these circumstances, existing manufacturers were also mulling over a relocation to elsewhere. Currently, there are 120 Japanese companies in Penang, out of the 1,200 nationwide and there were 1,600 Japanese residing in Penang.

There were also 500 Japanese living in Penang under the Malaysia My Second Home (MM2H) programme.

Source: http://www.theedgemalaysia.com/business-news/161753-fdi.html

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