Japan's Slowness May Be West's Gain : In Malaysia, an Opening 
International Herald Tribune
November 23, 1994
Michael Richardson 

Malaysian government impatience at the slow pace of technology transfer by Japan and the reluctance of many Japanese companies to promote Malaysians to senior management positions are opening new opportunities for American and European investment in one of Asia's fastest- growing economies.

The Japanese "still seem worried that we might acquire their technology and compete with them," Mahathir bin Mohamad, the Malaysian prime minister, said Tuesday. "We find that the Europeans and the Americans are much more confident about transferring technology." He was speaking at a two-day conference on trade and investment opportunities in Malaysia.

Emphasizing Malaysia's determination to move out of labor-intensive industry into capital-intensive manufacturing with products that have higher added-value, Mr. Mahathir said that Malaysia would gain the technology it needed one way or another.

"Sometimes by playing one against another, we manage to persuade people that if they don't" transfer technology "then they are going to lose out," he said at the conference, which was convened by the International Herald Tribune and Malaysia's Institute of Strategic and International Studies, in association with the American-Malaysian Chamber of Commerce. The meeting ended Tuesday.

Malaysia's main car maker, Perusahaan Otomobil Nasional Bhd., recently signed an agreement with Britain's Rover Group PLC that may lead to the manufacture in Malaysia of one of Rover's gasoline engines for the Malaysian company's Proton cars, breaking a Japanese monopoly. The Proton is a cornerstone of a government plan to make Malaysia a fully industrialized nation by 2020.

In an interview, Kisai bin Rahmat, deputy managing director for manufacturing at Perusahaan Otomobil Nasional, said the Malaysian company was also negotiating with several American firms interested in setting up motor vehicle component manufacturing in Malaysia.

"We are trying to widen our collaborative arrangements and strategic alliances," he said. "We want to further diversify our sources of supply because the Japanese yen is getting more and more expensive."

Mr. Mahathir told a recent conference in Penang attended by a delegation of U.S. senators and executives of major American companies that, while Japan would continue to play a critical role in Malaysia's development, the Malaysian government wanted to secure "as much American investment, technology and know-how as possible."

In recent weeks, six U.S. firms have signed investment and supply contracts in Malaysia worth more than $2 billion.

The United States exported goods to Malaysia valued at more than $6 billion in 1993.

And U.S. exports to Malaysia were up by nearly 23 percent in the first seven months of 1994, compared with the like period in 1993.

Speaking at the conference, John S. Wolf, the U.S. ambassador to Malaysia, said that by the end of the decade, "we project that our exports to Malaysia, Indonesia, Thailand and the Philippines will equal or even exceed our exports to Canada and Mexico."

Evidently alluding to Malaysian complaints about Japan's protectionist measures, he noted that Malaysian exports to the United States were nearly twice those to Japan and that virtually all were manufactured goods.

Mr. Mahathir said that one reason Japan might be reluctant to transfer advanced technology for the Proton car is that Malaysia can compete with Japan in some markets. "For example, we sell more cars in Britain than Mitsubishi itself. We can compete in terms of the quality of our products," he said.

Although majority-held by Malaysian government-controlled entitites, Perusahaan Otomobil Nasional is 17 percent-owned by Japan's Mitsubishi group.

Another source of Malaysian concern is the yen's rise by nearly 30 percent against the Malaysian ringgit so far this year.

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