ECONOMISTS have described Malaysia and Japan's commitment towards the second wave of the Look East Policy as timely amid continued uncertainties in Europe and a slowdown in China's economy.
With some adjustments to meet Malaysia's transformational phase, the Look East Policy, advocated by former prime minister Tun Dr Mahathir Mohamad in 1981, is expected to attract higher quality Japanese investments into Malaysia.
The policy will also benefit Malaysian companies keen on upgrading their industrial technology, the economists said.
"With what is happening in Europe and the concerns about China's economy, the Look East Policy can benefit Malaysia very well. As it is now, Japan is already our third largest trading partner," said AmResearch Sdn Bhd economist Manokaran Mottain.
Japanese companies started to set up their manufacturing bases in Malaysia after Dr Mahathir launched the policy more than 30 years ago. Since then, Japan has always been Malaysia's biggest foreign investor.
There are tremendous scope and opportunities to deepen trade and investment and improve business times between Malaysia and Japan, said RAM Holdings Bhd group chief economist Dr Yeah Kim Leng.
"In the industrial upgrading arena, Malaysian enterprises across small-, medium-, and large-sized spectrums need technological upgrading, productivity improvements and research and development support, which can be met by technologically advanced Japanese firms."
He said Japanese firms, on the converse, can use Malaysia as a base or partner local business players to expand their presence in the region, which is becoming more integrated under the Asean Economic Community agreement.
"Both can also explore mutual benefits from the respective country's strengths, such as Japan's high-speed rail technology and Malaysia's Islamic finance," he told Business Times yesterday.
Japan was Malaysia's largest foreign investor last year with RM2.8 billion worth of approved investments in 62 projects.
It was Malaysia's third-biggest trading partner last year, with trade totalling US$47.03 billion (RM150 billion).
Manokaran, meanwhile, said with the Japanese economy growing in strength as a result of "Abenomics" (economic policies advocated by Japan's Prime Minister Shinzo Abe), things are looking up for Japan and Malaysia is well-positioned to take advantage of this.
He said with Abenomics yielding good economic figures and pulling Japan out from years of deflation, it is indeed timely for Malaysia to adjust its Look East Policy and grab the opportunities offered by Japan.
"I believe within Asean, Malaysia can benefit the most from Japan's economic comeback. From my talks with some Japanese based here and working at the embassy, I found that there have been a lot of enquiries about Malaysia. I am certain that this refreshed Look East Policy will eventually see increased investment flow from Japan into our country."
Manokaran said after the 2011 devastating tsunami in Japan and later the fear of nuclear radiation, Japanese companies are keen to relocate their manufacturing bases to elsewhere. With attractive investment incentives, Malaysia can be a good choice for them.
Commenting on the state of Japanese economy, an analyst said the past two quarters have seen an impressive growth rate of four per cent and Bank of Japan's business index is at its six-year high.
"Things look promising in Japan now and our strong relationship with Japan no doubt can benefit us," said the analyst.