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Japanese firms in Malaysia watching Mahathir’s moves

Jiji Press TOKYO (Jiji Press) — Japanese companies in Malaysia are closely watching the moves of Mahathir Mohamad, who is believed to try to break the country’s dependence on China as he came back as prime minister.

About 1,400 Japanese companies currently operate in the Southeast Asian country, according to Japan’s Foreign Ministry.

Japanese manufacturers, mainly electronics makers, started operations in Malaysia in the late 1980s on the back of cheap labor there. Service business operators followed later as local income levels rose.

Cosmetics maker Shiseido Co. expects no major impact on its sales in Malaysia from the change of government. “Japanese cosmetics are highly evaluated,” Corporate Executive Officer Norio Tadakawa said.

If the new government delivers on its pledge to abolish the goods and services tax, consumption may be boosted. But if the country’s finances deteriorate due to the tax cut and its currency drops as a result, import prices could rise, negatively affecting Japanese service firms there.

Mahathir achieved progress in Malaysia’s economic development under his Look East policy of learning from countries such as Japan when he was previously prime minister in 1981-2003.

During the election campaign, he criticized the previous government for its focus on economic activities with China.

In the bidding for a plan to build a high-speed railway connecting Kuala Lumpur with Singapore, a consortium of Japanese companies such as Sumitomo Corp., East Japan Railway Co. (JR East), and Hitachi Ltd. is expected to compete with Chinese rivals.

There is a view within the Japanese firms that the change of government in Malaysia will work positively for them in the bidding.

Meanwhile, the new government may put priority on protecting domestic industry to strengthen its support base. “Effects from the change of government need to be thoroughly examined,” a Japanese energy industry executive said.Speech

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