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Anniversary of Japanese ODA in Japan International Cooperation Agency Malaysia Office Suite 29.03, Level 29, Menara Citibank, 165, Jalan Ampang, 50450 , Malaysia. with a focus JICA’s Cooperation Tel: 03-2166 8900 Fax: 03-2166 5900 http://www.jica.go.jp

Printed in 2017 Over the last six decades, Japan’s Official Development Assistance (ODA) has walked hand in hand with the development of Malaysia, serving as a foundation for Overview of Japan’s ODA stronger bonds among people in Malaysia and Japan. This brochure introduces the of Japanese ODA to Malaysia, with a central focus on JICA’s cooperation. Japan’s Official Development Assistance (ODA) to Malaysia dates back to 1956, when the first technical trainees visited Japan from the Federation of Malaya. Since then, the Japanese government has continuously cooperated with the Malaysian government even to this present day.

Social and Economic Development of Malaysia ODA is broadly defined as resource flows provided by official agencies to promote the economic development and of developing countries. It consists of bilateral and multilateral cooperation. Bilateral cooperation is implemented on a government-to-government basis, and multilateral cooperation is conducted through financial sources contributed to international organisations. Japan’s bilateral cooperation has the Since the independence of Malaysia in 1957, Malaysia’s economy GDP and GDP per Capita of Malaysia (at current prices) has demonstrated a stable growth for over 60 years. The population following three modalities: (US$ billion) (US$) grew by 3.7 times from 8.16 million in 1960 to 29.90 million in 2014. 350.0 12,000 Loan : Long-term, low-interest loans, also known as yen loans, provided to large-scale infrastructure projects and especially in Malaysia, During the same period, the country’s Gross Domestic Products study abroad programmes; 300.0 GDP (current US$ billion): Left axis 10,000 (GDP) increased by about 180 times and GDP per capita by about GDP per capita (current US$ billion): Right axis Technical cooperation: Cooperation aimed at human resource and institutional development in a variety of fields including infrastructure, 250.0 50 times. The has improved the living of its people. 8,000 economy, society, and environment through training, advice/consultation by experts, and activities by members of Japan Overseas The incidence of poverty based on the income below the 200.0 Cooperation Volunteers; and 6,000 poverty line set by the Malaysian government has outstandingly 150.0 Grant aid: Financial assistance without an obligation for repayment, granted for improvement of equipment and buildings for development. decreased from 49% in 1970* to 0.6% in 2014. 4,000 100.0 The gross disbursements of Japan’s ODA to Malaysia from 1969 to 2,000 Japan's Official Development Assistance to Malaysia Under “Vision 2020” which is a long-term vision of the country, the 50.0 2014 amounted to USD 7.8 billion in total. The total amount of (Cumulative Amount) Malaysian government is promoting economic growth as as the 0 0 Japan’s ODA based on the net disbursements of loan aid (deducting quality of life of all with an aim to becoming a fully (Million USD) 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 the repaid amounts) was over USD 2.5 billion as of the end of 2014. Global Financial Crisis 3,000 by the year 2020. (Year) Source: , “World Development Indicators” While Japan’s bilateral cooperation has also been implemented by * The 1970 figure is only for Peninsular Malaysia. In 2014, the average 2,500 Asian Financial Crisis monthly poverty line income was RM930 for Peninsular Malaysia, RM1,170 various government organisations, JICA, through the above three for Sabah, and RM990 for Sarawak. modes of cooperation, has been taking key roles in it under the 2,000 Japanese government’s policy.

1,500 In regard to human support, since 1956, Japan has accepted about Economic Relationship between Malaysia and Japan 17,000 trainees from Malaysia through JICA training programmes. 1,000 JICA has dispatched about 3,600 experts in total to Malaysia. In addition, a total of about 1,500 volunteers have worked with the 500 In line with the economic development of Malaysia over the past 60 a major contribution to the total trade amount of Malaysia. In 1995, people in Malaysia. years, the economic relation between Malaysia and Japan has products accounted for more than 80% of its total 0

become increasingly closer than ever. In the 1960s and 1970s, export amounts, and Malaysia has successfully transformed itself 1975 1980 1985 1990 1995 2000 2005 2010 2014 Malaysia’s exports to Japan were mainly wood and tin, and its from an agricultural based into an industrialised country Loan Aid (Net Disbursements) Technical Cooperation Grant Aid (Year) Source: Ministry of Foreign Affairs of Japan, “ODA Country Data”, etc. imports from Japan were and metal products. From the exporting industrial products to the world. In the , the trade middle of onward, Japanese manufacturers set up many between the two countries has further expanded, thanks to the rapid subsidiaries in Malaysia, and hence, the electric and electronics increase of liquid natural gas (LNG) export by Malaysia. industry in particular saw tremendous growth. This was further driven by the foreign direct investment (FDI) policy of the Malaysian Investments by Japanese firms have played a significant role government and the rapid appreciation of in the in Malaysia policy which places attracting foreign Features and Contribution of Japan’s Cooperation foreign currency market. Japan exported industrial materials and direct investments as its core strategy. As of the end of 2015, Japan’s parts for production to Malaysia, while Malaysia exported to Japan balance of direct investments in Malaysia was RM 73.8 billion, Cooperation in response to changing needs for development programmes as well as infrastructure development. The human making it the second largest investing country after . manufactured products from the factories here apart from wood and Japan extended cooperation to Malaysia along with its needs. An resource base which was thus formed in an extensive and continuous mineral fuels. During this period, the trade exchange with Japan saw emphasis was placed from the 1970s on the development of economic way had not only supported the Malaysian government and the infrastructures, including power generation. Later, in the 1980s and development of local industries and society, but also paved the way Balance of Foreign Direct Investments in Malaysia Trade Amounts between Malaysia and Japan 1990s, an increasing emphasis was placed on the improvement in for many Japanese investors to expand businesses in Malaysia. by Country/Area (as of the end of 2015) manufacturing technologies and human resources. In the 2000s, the (RM million) (%) Evolution of project cooperation by governments to broader 90,000 50 (RM million) cooperation was extended to a more diversified field including urban Others interactions involving private sectors, local authorities and civil Exports to Japan (Left axis) 101,790 80,000 and environmental improvement. The timely cooperation was enabled societies Imports from Japan (Left axis) 40 Singapore by systematic development policies under the eleven Malaysia Plans 70,000 % of Exports to Japan in Total Exports (Right axis) 107,524 , Republic of In Malaysia-Japan cooperation, trusts were fostered among those % of Imports from Japan in Total Imports (Right axis) 8,254 and a mutual trust between the people of Malaysia and Japan. 60,000 engaged in many project sites. The trusts formed a basis for 30 50,000 8,659 extensive relations between not only government officials in Malaysia Bermuda A great emphasis on human resource development 14,337 40,000 Japan and Japan, but also varying parties such as companies, local authori- 20 73,757 Under Japan’s cooperation, most of the projects have been designed 30,000 18,467 ties and civil societies in the two countries. These relations are an Virgin (British) to incorporate the components of training and technical transfer, 21,532 20,000 essential asset for both Malaysia and Japan in the future. 10 regardless of whether they are infrastructure or industrial development. 21,620 10,000 43,882 In Malaysia, loan aid has long been extended to scholarship 23,278 0 0 26,634 35,193 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 (Year) Source: Department of Statistics; JETRO,"Malaysian Economy in Figures 2010" Source: Department of Statistics, Malaysia

1 2 Japan’s ODA has been implemented in a variety of areas. Presented below are major examples of such cooperation.

Road and Water Infrastructures Energy

Consistent cooperation from planning, implementation to operation Building a foundation of industrialisation

Infrastructures of roads and rivers in particular are not developed Energy and electricity development is a foundation of industrialisa- environmentally-friendly facility of electricity power supply. The new simply to meet an existing demand but to prepare for future changes tion and the community as a whole. Cooperation was started from electricity generation equipment achieved the highest generation of the socio-economic structure. This requires long-term and compre- Temengor Hydro-Electric Project to which Japan provided the efficiency of 55% among all power plants in Malaysia at that period, hensive planning. Japan’s cooperation in infrastructure development long-term yen loan. The mid-1970s was the period when electricity and the plant achieved 37.7% decrease of greenhouse effect gas has thus emphasized long-term planning from an overall point of view. Typical examples are a water resource development plan needs were surging in tandem with the rapid economic development emission during 2009-2011. prepared in 1978-82 and a national road network development plan in of the country. The long-term yen loans were provided to hydro-elec- Until now mutual-relationships between two countries continue; 1990-93. Under these national plans, a series of plans were prepared tric power plants with multi-purpose dams, thermal-electric power private companies of both Malaysia and Japan who had worked at the regional level, including river basin management plans for plants and installation of new facilities . Also, studies were conducted Kinabatangan, Klang, Kelantan and Mudah, and transport plans for together for some of the projects have concluded cooperation agree- to formulate plans of electricity development. Later in late-1990s major cities and their vicinities, including Kuala Lumpur, Bahru ment based on the mutual trust between engineers and companies after the currency crisis when private investments in electricity and Klang Valley and a plan to link the Kuala Lumpur metropolitan of both countries. and Johor through an express way. Based on these prepared sector were stagnated the Port Dickson Rehabilitation plans, a number of investment projects were identified for funding by Pahang-Selangor Raw Water Transfer Project Project, for example, was implemented, and contributed to the new the Japanese loan aid. A typical example is “Seremban - Ayer Hitam toll expressway”. Nine projects were financed by the Japanese loan aid for road development and water resource management, including “Crocker Range Crossing Road Project” in Sabah state, being the first of many road projects, and “Pahang-Selangor Raw Water Transfer Project” with a Japanese loan aid of the largest amount. Subsequent- ly, the Malaysian government has been implementing projects based on these plans with its own funds.

The infrastructure development cooperation was not only for physical but also technical and managerial achievements. Government officials engaged in road development and river manage- ment often mention that the methods of planning and management accumulated in Japan have been introduced to Malaysia and further developed through the process of their application to situation in Malaysia. Crocker Range Crossing Road Project Tenom Pangi Hydroelectric Power Station Port Dickson (Tuanku Jaafar) Power Station (Construction in 1979; Rehabilitation in 1992) (Rehabilitation in 1999)

Industrial Development

Responding timely to the needs and priorities of industrial policies

Malaysia’s economy was mainly dependent on , , through support for technology development, SMEs promotion, A significant case is a variety of cooperation with the Standards and and mining until the 1960s. In the 1970s, industrialisation started vocational training, and trade and investment promotion. They were Industrial Research Institute of Malaysia (SIRIM) over the past three rapidly, thanks to the government’s leadership on education and implemented in line with the priorities of the Malaysian government’s decades. SIRIM is in charge of dissemination, establishment, and infrastructure development. Malaysia has maintained efforts to industrial policy in that period. Most recently, institutional improve- approval of the international and domestic standards for industrial strengthen its industrial capacities including technology, human ment has been a main focus in response to private sector develop- products. JICA supported SIRIM in pursuing this mission by conduct- resource, and management, while utilising foreign investments as ment, such as energy saving, occupational safety, pollution control, well. Japan’s cooperation has specifically focused on these self-reli- intellectual property rights, and customs system. ing training, dispatching experts, and supplying equipment. In the ant efforts. An emphasis was given to industrial development field of development and dissemination of industrial technology, various cooperation projects were implemented in for SIRIM to lead industrialisation of Malaysia. The project areas ranged from fundamental technologies such as metal processing and foundry to advanced ones such as fine ceramics and artificial intelligence (AI) system development. The cooperation had successfully attracted foreign direct investments including those from Japan and built an important basis for current economic policies.

Centre for Instructor and Advanced Skill Training (CIAST) National Metrology Institute of Malaysia (Former National Metrology Laboratory, SIRIM Berhad) 3 4 Higher Developing human resources through expansion of universities Maritime Enhancing security in the and other sea areas Education and supports for overseas students Security

Japan’s cooperation in the education sector focused on higher Overseas students’ projects supported the development of engineer- Malaysian coastal area is a strategic sea gateway for many education. The Malaysian government put greater importance on the ing workforce that Malaysia needed. Human resource development vessels. It is a vital point not only for Malaysia but also for other expansion of universities in the country and support for overseas study through these projects had also encouraged the exchange of people countries in South as well as East Asia including Japan. In as the era of industrialisation started around the 1980s, which sought between Malaysia and Japan. 2005, the Malaysian government established the Malaysian Maritime after more high-qualified engineers. Japan’s cooperation was in line Enforcement Agency (MMEA) to strengthen maritime security and with this demand and therefore, focusing on the expansion of university tackle the problems of piracy, smuggling, and fish poaching that the of science and technology and the support for overseas students. Strait of Malacca and some other sea areas in Malaysia faced. The is one of the features in the cooperation on Japan has cooperated with MMEA in strengthening the institutional human resource development between Malaysia and Japan. The and human capacities since its inception. In recent years, further cooperation has been extended in maritime enforcement and former Prime Minister of Malaysia, Tun Dr. Mahathir advocated the search and rescue operations. Look East Policy which aimed to learn the work ethics and values In this respect, MMEA is now effectively maintaining maritime apart from the languages and technologies from eastern countries security in important seas such as the Strait of Malacca which including Japan and . A number of overseas students influences the global economy. and training projects have been conducted in cooperation with the Cooperation to Malaysian Maritime Enforcement Agency (MMEA) Malaysian and Japanese governments under the Look East Policy. Japan supported expansion of many universities. Among them were packages of facilities, equipment and experts were provided to University of Malaya Language Centre, Department of Marine South-South Contributing to the international community through and Department of Biotechnology at Universiti Pertanian Malaysia Cooperation Malaysia-Japan cooperation (currently Universiti Putra Malaysia), Department of Medicine at the National University of Malaysia, University of Sarawak and

Malaysia-Japan International Institute of Technology. Also, cooper- South-South cooperation is a form of cooperation in which a ation on and ecosystems conservation was conducted Malaysia-Japan International Institute of Technology developing country supports another developing country. Malaysia started the Malaysian Technical Cooperation Programme (MTCP) in with Universiti Malaysia Sabah. 1980. Since then, it has been a major player of South-South cooper- Another major cooperation on higher education was intended to ation in the international community. The MTCP has attracted about support Malaysian students studying abroad to Japan. Japan 31,000 participants from about 140 countries. provided a total of JPY 18.5 billion for the “Higher Education Loan Japan has technically and financially supported MTCP since 1992, Fund Project” that continued from 1993 to 2015 in three phases. mainly based on the experience of bilateral technical cooperation In addition, Japan supported the Malaysian government when it faced between Malaysia and Japan. Subject field varies, from production difficulty securing the budget for the Look East Policy programme due technologies, vocational training, IT, occupational safety, entrepre- to the Asia currency crisis in 1997. Japanese government provided neurship development, environmental conservation, preventing approximately JPY 14 billion from 1999 to 2004 to continue the infection, higher education, public administration, tariff system, programme. About 2,300 students earned bachelor/master/doctor’s government revenue control, coastal guard, peace keeping, trade to degree in Japan from these two overseas student projects. finance. Major targets are ASEAN countries including , Third Country Training Programme (TCTP) on Occupational Safety and Health Management , and , African countries and Islamic Higher Education Loan Fund Project countries, especially and Palestine.

Urban Environment: Toward the city-to-city cooperation for a better environment JICA Creating the future through living and working together with Sewage and Volunteers the people

The ratio of urban to rural population reversed from “1 to 3” to “3 to 1” Japan Overseas Cooperation Volunteer (JOCV) is an ODA during the period from 1960 to 2015. Malaysia is now predominantly programme of Japan. They are expected to contribute to development an urban society. However, the country cannot cope with the rapid by living and working together at the grass-roots level with the local urbanisation as much as it has successfully managed the economic people. Five volunteers first participated in the development of development. Thus, there have been growing concerns over the Malaysia in 1966. In the 1960s and the 1970s, they participated in the urban environment. In response to this, Japan’s cooperation has been agriculture development, preschool teaching and other rural develop- well underway since the 2000s. Major components are sewerage ment activities mainly under FELDA* programmes. In the 1980s and development and technical assistance to local governments for the 1990s they participated in the activities along with industrialisation, strengthening managerial capacity and the operation and mainte- such as car repair, computer and . In nance capacity of facilities for solid waste management. more recent years, many participated in activities that tended to be left Urban environmental management calls for the partnership with local behind economic growth such as preservation of natural environment residents as well as local governments. Through JICA partnership and assistance and education for persons with disabilities. Since programme, universities, urban and NGOs participated 1966, about 1500 volunteers have worked in Malaysia, which is the fourth largest country which has received JOCV members in the in encouraging the Japanese experience in urban environmental Japan Overseas Cooperation Volunteers (JOCV) : improvement to be shared among Malaysian local governments. Grass-roots Technical Cooperation on Improving Waste world. This is made into reality thanks to the warm understanding Automotive Repair Relationships between Malaysia and Japan have since seen increas- Management in Kota Kinabalu (Visit to City, Japan) and acceptance by the people, community and the government of ing diversity of cooperation from city to city in addition to government Malaysia, as well as the volunteers’ own efforts. to government as well as company to company cooperation. * Federal Land Development Authority: Malaysian government agency that was founded to foster land-own farmers through the development of land and relocation.

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