KUALA LUMPUR, Jan 16 — Business sentiment among Japanese companies in Malaysia has improved for the fourth consecutive year, even as competition intensifies, according to the Financial Year 2024 Survey by the Japan External Trade Organisation Kuala Lumpur (Jetro).

In a statement, Jetro said Malaysia’s profitability rate exceeds the Asean average, with the expected operating profit margin for 2024 at 70.8 per cent, and the nation stands out as the only major Asean country to record consistent growth over the past four years.

According to the survey, 48.9 per cent of the companies plan to promote local human resource development and employment and are mulling on expanding their business in the post-Covid era.

The Survey on Business Condition of Japanese Companies Operating Overseas Asia/Oceania Edition involved Japanese companies operating in 20 countries and regions, conducted from Aug 20-Sept 18, 2024.

"The operating profit outlook for 2025 shows that the percentage of companies expecting an improvement has increased in all countries compared to 2024, with Malaysia’s forecast showing a slight increase to 41.9 per cent.

"In the post-Covid era, Malaysia has outperformed other major countries in several initiatives: local human resource development (58.8 per cent), employment increase (35.8 per cent), and the promotion of decarbonisation (24.9 per cent),” it said.

The survey also revealed that the percentage of companies considering business expansions in the next one to two years remains at 48.9 per cent.

Over 70 per cent of the respondents are concerned about rising labour costs, and high employee turnover is the most serious problem among major Asean countries.

It also found that inflation-related cost increases will affect supply chain management, leading to the transfer of electrical and electronics production to Malaysia.

Additionally, 83.5 per cent of companies responded that they are either already working on or planning to take on decarbonisation efforts. — Bernama