PETALING JAYA: Small and medium-sized Japanese firms are increasingly targeting Malaysia for mergers and acquisitions (M&A) and strategic partnerships as Japan’s overseas strategy shifts in response to a shrinking domestic market, according to Japanese M&A advisory firm Nihon M&A Center.
Nihon M&A Center regional head for Southeast Asia Yusuke Ojima said engagement from Japanese corporations including small and medium-sized enterprises has been rising across acquisitions and sector-focused collaborations.
“Many Japanese companies are looking for faster expansion overseas. Southeast Asia has been a familiar region for the Japanese since almost 30 to 40 years ago. Many Japanese companies such as automobile makers and E&E companies have already entered this market,” he said in an interview with SunBiz.
For decades, Japanese expansion into Southeast Asia was dominated by large corporations in automotive and electronics. That dynamic is now shifting.
“But now, we can see not only the large corporations, but also small and medium-sized enterprises, looking for faster expansion to Southeast Asia, including Malaysia, Ojima said.
He described Malaysia as occupying a middle ground within Southeast Asia, more mature and structured than some regional peers, yet still delivering consistent growth.
“The market is not really that big compared with Vietnam or Indonesia. But one of Malaysia’s advantages is that it is already very mature. At the same time, it is still a growing country and market. Even in terms of GDP (gross domestic product), we can still see more than 4.5% growth every year.”
That combination of stability and momentum, he added, gives Malaysia a distinct position within the region’s investment landscape.
While neighbouring economies may offer larger populations or faster headline growth, Malaysia provides a relatively predictable regulatory framework alongside sustained expansion across key sectors.
Ojima said sectors such as information technology (IT), healthcare, semiconductors and food continue to expand, strengthening Malaysia’s position as both a stable and growth-oriented market within Southeast Asia.
The breadth of activity across technology, manufacturing and consumer industries reflects what investors see as a balanced operating environment.
“I think IT is definitely a hotspot for Japanese companies. Malaysia is already quite stable and well-organised, with very advanced technology there, the country’s digital ecosystem and infrastructure make it particularly attractive for cross-border collaborations and acquisitions.”
Malaysia’s governance standards and widespread use of English help facilitate cross-border transactions, offering Japanese investors greater transparency, clearer communication and smoother due diligence compared with parts of the region, Ojima said.
“Malaysia’s regulatory and corporate framework remains relatively structured and transparent by regional standards,” he said.
Malaysia is seeing growing engagement not only in M&A but also in sector-specific partnerships, particularly in cybersecurity and IT-related services.
“We also engage in some deals related to cybersecurity and IT-related service companies between Japanese companies and Malaysian companies,” Ojima said.
Beyond digital services, the halal ecosystem has become a strategic focus. Ojima said the firm has been involved in deals involving halal-certified food, personal care and logistics businesses.
“I understand halal is not only for food, but also even skin care, personal care and sometimes related to logistics,” he said.
Japanese companies are seeking knowledge and operational know-how in Muslim markets, with Malaysia often serving as a starting point before expansion into Indonesia, the Middle East or Africa.
“The standard of halal in Malaysia is quite high and well-organised. So, many Japanese companies are looking for halal in Malaysia first, then expand to other regions,” Ojima said.
The China Plus One strategy has also contributed to interest in the region, though Ojima described it as one of several factors rather than the primary driver. The approach encourages companies to maintain operations in China while setting up production in other countries to mitigate risks.
Shifts in semiconductor and healthcare supply chains have created opportunities, prompting Japanese firms to pursue acquisitions and greenfield investments, Ojima noted.
“Many of those companies are shifting to Southeast Asia to capture and acquire those opportunities, Japanese companies are also looking for companies in Malaysia or Southeast Asia through mergers and acquisitions or even purely greenfield investments as well,” he said.
To deepen engagement, Nihon M&A Center has been working with Japanese regional financial institutions to introduce them to Southeast Asian markets, including Malaysia, through collaboration with agencies such as the Malaysian Investment Development Authority, Bursa Malaysia and CIMB.
“I think this kind of event should continue, so that we can bring more investors, and collaborate with Malaysian firms, so we can see more growth and benefits for both countries,” Ojima said.
Recent transactions reflect the growing momentum of Japanese corporate activity in Malaysia across financial services, energy and digital sectors.
Among the latest notable deals, Japan-based Amova Group, formerly known as Nikko Asset Management, is acquiring near-full ownership of Malaysian fund management firm AHAM Asset Management.
In the energy sector, Japan’s Idemitsu Kosan recently entered Malaysia’s upstream oil and gas segment through the acquisition of interests in offshore exploration blocks in Sarawak. Mitsubishi Corp has expanded its exposure to Malaysia’s liquefied natural gas sector through a larger stake in a Petronas-linked project in Sarawak.
Japanese technology firms, too, have been expanding their regional footprint through Malaysia. An example is NTT Data’s acquisition of Malaysian payment solutions provider GHL Systems Bhd.
The Sun Malaysia
