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"The 60Th Anniversary of Japanese ODA in Malaysia with a Focus

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Perlis Kedah Kelantan Penang Terengganu Perak Selangor Pahang Kuala Lumpur Negeri Sembilan Melaka Sabah Johor Sarawak of Japanese ODA in Malaysia with a focus on JICA’s Cooperation Japan International Cooperation Agency Malaysia Office Suite 29.03, Level 29, Menara Citibank, 165, Jalan Ampang, 50450 Kuala Lumpur, Malaysia. Anniversary Tel: 03-2166 8900 Fax: 03-2166 5900 http://www.jica.go.jp Printed in February 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 course 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 up 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 welfare 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$) grew by 3.7 times from 8.16 million in 1960 to 29.90 million in 2014. 350.0 12,000 Loan aid: Long-term, low-interest loans, also known as yen loans, provided to large-scale infrastructure projects and especially in Malaysia, During the same period, the country’s Gross Domestic Products study abroad programmes; 300.0 GDP (current US$ 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 economic growth 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 household 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 well as the 0 0 Japan’s ODA based on the net disbursements of loan aid (deducting quality of life of all Malaysians 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 developed country by the year 2020. (Year) Source: World Bank, “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 manufacturing 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 nation 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 machines and metal products. From the exporting industrial products to the world. In the 2000s, the trade middle of 1980s 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 always played a significant role government and the rapid appreciation of Japanese yen in the in Malaysia industrialisation 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 Singapore. 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 Korea, 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 Australia 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 Germany 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 Islands (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 United Kingdom Netherlands regardless of whether they are infrastructure or industrial development. 21,620 10,000 43,882 Switzerland In Malaysia, loan aid has long been extended to scholarship 23,278 Hong Kong United States 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.
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