Dynamics of Japanese foreign direct investment (jfdi) in electronic and electrical (E&E) Manufacturing sector in Malaysia

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Date
2011
Authors
Swee Ean, Tan
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Abstract
This research focuses on the dynamics of JFDI in E&E manufacturing sector particularly the significance changes and the potential development in Malaysia This study commenced with significant statistical data from Toyo Keizai Data Bank 2008 revealing the trend of JFDI and its essential catalytic role in E&E manufacturing function, employment, R&D, export and import particularly in China, NIEs and ASEAN. Inevitably an intense competition emerged from the potential huge market of China and the newly virgin market of Vietnam. With Japanese investors perception oriented methodology, the research objectives encompassed (i) to identify the key attraction factors in Malaysia, (ii) to assess the strategy and effectiveness of R&D in Japanese advanced technology and scientific knowledge transfer, (iii) to evaluate the Malaysian labor productivity, (iv) to identify solution to overcome the deficit resulted from the imbalance trade between Japan and Malaysia, and (v) to learn the strategy in remaining Malaysia an ideal competitive investment location in Asia region. During the fieldwork in Japan, the primary data of 23% responded from the population of 87 Japanese E&E manufacturing firms running operation plants in Malaysia. Simultaneously invaluable insights acquired from face-to-face discussion with 6 Japanese experts in Japan. The Japanese E&E manufaeturing plants mostly clustered at the potential industrial estates located in Northern Industrial Region, Central Industrial Region and Southern Industrial Region in Peninsular Malaysia. The empirical findings revealed the dominant key attraction of well-developed infrastructure and traffic satisfied the most. Additionally with supportive ICT, Central Industrial Region emerged as a prominent agglomerated R&D function location for top Japanese leading E&E firms namely M€1tsushita (Panasonic) and Sharp Corporation in Southeast Asia region. Skill of labor a'ld midmanagement is satisfactory, but the increasing labor cost resulted from shortage of labor has impacted the total production cost. Strategic diversifications comprising "kaizen" has been implemented, the labor productivity has yet to reach the expected level. The significant role of SMEs in logistics function for part supply is essential to overcome the excess import of raw material and parts. Market"i'n g and sale, and R&D functions added competitive strength for Malaysia in hosting Japanese E&E manufacturing plants for long term in Asia region.
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Keywords
Japanese foreign , Manufacturing Sector
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