The Economic Relations with the World: Inter-country

Today, natural resource remains important as Malaysia is a major producer of rubber and palm oil, exports considerable quantities of petroleum and natural gas, and is one of the world’s largest sources of commercial hardwoods. However, with Mahathir at the helm steering the nation forward, Malaysia has emphasized export-oriented manufacturing to fuel its economic growth. By the early 21st century, the sector had become the backbone of Malaysia’s economic growth, constituting the largest share (nearly one-third) of the country’s GDP⁵.

Therefore, Malaysia is moving steadily towards developed-nation status by the year 2020 (Zainah, 1987). In conjunction with the vision 2020, the government has established the Ministry of International Trade and Industry to position Malaysia as the world's top ten trading nation by 2020. The mission of the ministry is to promote and strategize Malaysia's global competitiveness in international trade by producing high value added goods and services.

Using the comparative advantages of a relatively inexpensive but educated labor force, well-developed infrastructure, political stability, and an undervalued currency, Malaysia has attracted considerable foreign investment and build the bilateral ties with regional powers, especially the Western and Japan.

Accordingly to the lastest report from CIA- Central Intelligence Agency of the States, Malaysia’s export partners are as the following: US 15.6%, Singapore 14.6%, Japan 9.1%, China 8.8%, Thailand 5%, Hong Kong 4.6% (2007). The exports

5 For this information, I refer to CIA World Factbook, December 2003. http://www.cia.gov/cia/publications

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commodities are as electronic equipment, petroleum and liquefied natural gas, wood and wood products, palm oil, rubber, textiles, chemicals (Kazi 2003b).

On the other hand, the import partners are as: Japan 13%, China 12.9%, Singapore 11.5%, US 10.8%, Taiwan 5.7%, Thailand 5.3%, South Korea 4.9%, Germany 4.6%, Indonesia 4.2% (2007) in electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, as well as chemicals ( Kazi 2003b).

Relationship with Japan

The diplomatic relationships between Malaysia and Japan have been established since 1957 and by the year 2006, number of Japanese nationals residing in Malaysia is approximately 9,928⁶.

According to the 2005 data from the Ministry of Foreign Affair of Japan, the direct investment from Japan into Malaysia is 58.1 billion yen⁶. On the other hand, the trade with Japan for exports and imports are 1,618 billion and 1,383 billion yen respectively for 2005.

However, for the total cumulative in Technical Cooperation is about $ 105 billion yen.

On 13 July 2006 in Tokyo, relevant parties from both Japan and Malaysia, such as Trade and Industry of Japan and the Minister of International Trade and Industry of Malaysia, hold the first meeting of the joint committee established under the agreement between the government of Japan and the government of Malaysia for an economic partnership.

6 For this information, I refer to Ministry of Foreign Affairs of Japan, 2009

< http://www.mofa.go.jp/region/asia-paci/malaysia/index.html>

They shared the view that the agreement will contribute toward enhancing the cross-border flow of goods, services and capital between Japan and Malaysia, as well as bilateral cooperation in fields of mutual interest. They underscored that the agreement will enable both countries to make the most of their economic complementarity and further promote the development of their respective economies. The Ministers also stressed that the agreement constitutes a solid basis for the strategic partnership between Japan and Malaysia.

Following the example set by Japan, Malaysia has successfully transformed from an exporter of rubber and tin into a manufacturer of electronic equipment, steel and cars.

Since then, manufacturing has undergone rapid expansion and has a large influence in the country's economy and helped transform Malaysia into an Asian economic tiger (Chaudhuri, 2006).

Western Countries

In the wake of September 11 terrorism attack to the United State, perception between the West and the East (particularly the Islamic world such as Malaysia) has changed drastically. Suspicion towards each other developed, adding fuel to the history of tensed relationships since the Iraq war and Asian crisis that see the East blaming the West on their aggression and greed of speculation. It also led to a search for development models in Asia, most notably Japan.

However, today, the United States still is Malaysia's largest trading partner and Malaysia is the tenth-largest trading partner of the U.S. and the cumulative value of United States private investment in Malaysia exceeds $10 billion⁷. Growing economy of Malaysia       

7 For this information, I refer to 10. " Malaysia–United States relations” Wikipedia. 12 May 2009

<http://en.wikipedia.org/wiki/Malaysia_%E2%80%93_United_States_relations >. 

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increases demand for U.S. exports and Malaysia offers many excellent prospects for U.S.

exporters. In addition, computer sales in Malaysia are at record levels and record growth rates, creating a strong market for computers and peripherals, for instances, Intel, Dell as well as other Computer giant brand have already set up their plants in Malaysia.

Questions arise whether Malaysia can overcome the many new challenges that it will confront with the rising tide of globalization. Will Malaysia be able to seize the opportunities through globalization and collaboration with the powerful multinationals corporations? Could a successful alliances or collaboration exist in such a condition full with cultural dissimilarity?

As we can see from the above information, Japan and the United States of America are the Malaysia’s major trading partners as well as the source of investment and technology. The number of Japanese and Western subsidiaries or joint ventures or strategic alliances in Malaysia has significantly increased in the past decade, and thus, we would like to identify their pattern of trust building process of Malaysian Chinese group, in the existence of cultural barriers.

With the possession of intangible assets (technology transfer) and tangible assets (setting up manufacturing plants) apart from human resources, will those foreign investments might help to develop the economic-based of trust and act as an exclusive prerequisite to establish the inter-firm relationship?

Will the style of western business management adapts itself to the Chinese ways of doing business or alternatively, Malaysian Chinese will try to adapt the western way of doing business, in which formal mechanism is more often being used. If Yes, will the role

of informal network or guanxi as the main factor responsible for the success of the Chinese business community in Malaysia faded if the trading partners are from Western? If No, will Malaysian Chinese develop trust according to the own contemporary ones and continue the notion of "Look East Policy" in the business context.

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