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JETRO Releases Results of Monthly Survey on Japanese Business Sentiment in East Asia.

Tokyo, Japan, Sept 27, 2006 - (JCN Newswire) - JETRO's monthly survey of Japanese companies and affiliates operating in 12 countries/regions of East Asia revealed that overall current sentiment remained subdued in the ASEAN region for the tenth straight month in September.

In China and North Asia, overall current sentiment continued strong in mainland China in September, while declining in South China, where firms are facing rising labor costs.

JETRO polls the companies to measure year-on-year changes, expressed as diffusion indices, in their business outlooks for the current month and the next two to three months going forward.

Overall current business sentiment for the five ASEAN countries included in the survey declined 5.7 points over the previous month, with the index remaining in negative territory for the tenth straight month in September. Individual indices remained in negative territory for all countries with the exception of Singapore.

Overall forward business sentiment for the ASEAN region improved 1.4 points in this month's survey, although the index remained in negative territory. Notable gains were recorded in the Philippines, where the index returned to positive territory, and Indonesia, which recorded a dramatic 15.6 points (although remaining in negative territory) in this month's survey, on the back of a buoyant transport equipment industry.

Overall current business sentiment for China and North Asia continued solid, improving 2.7 points over the previous month in September. By location, the index for the Republic of Korea (ROK) fell into negative territory (now at -18.5) for the first time in 18 months, due to depressed economic sentiment in the country, rooting from the national current account dipping into red ink for the first half of this year. Current sentiment for mainland China and Hong Kong continued strong; the individual index for mainland China improved 4.6 points to 19.1, while the index for Hong Kong improved 4.3 points to 18.9.

Overall forward business sentiment for China and North Asia declined 5.1 points in this month's survey. Forward indices for mainland China and Hong Kong remained strong, while that for ROK continued to fall (now stands at -26.3)

JETRO included a supplemental question in the September survey asking about the negative impact (if any) of rising labor cost on business sentiment for this month and the next two to three months going forward. Overall, respondents linking rising labor costs to falling current sentiment was 37.9%, while 46.4% expected negative impact from labor cost rises for the next two to three months. By country and region, a higher percentage of firms in China and North Asia (compared to those in the ASEAN region) cited negative impact from rising labor costs; respondents linking labor cost rises with falling current sentiment were 38.7% in China and North Asia and 37.4% in the ASEAN region. Firms expecting negative impact from rising labor costs over the next two to three months were 49.2% in China and North Asia and 44.5% in the ASEAN region.

A total of 770 replies were received in ASEAN countries (140 in Indonesia, 110 in Malaysia, 192 in the Philippines, 215 in Singapore and 113 in Thailand), 215 in China (49 in the North, 58 in the Northeast, 72 in the East and 36 in the South); 138 in Hong Kong; 38 in the ROK and 113 in Taiwan.

JETRO, in cooperation with Japan's Ministry of Economy, Trade and Industry, has been conducting the survey in the first week of every month since June 2001 in the five major ASEAN countries, since June 2002 in South China, Hong Kong and Taiwan, since July 2002 in North and East China, and since October 2002 in the ROK and Northeast China. Results for the ROK are broken down into manufacturing and non-manufacturing only, but not by industry, and no breakdown is given for Northeast China, due to the small numbers of companies surveyed in these areas.

The aim of the survey is to provide up-to-date information on business conditions in the Asian economy to help companies develop more effective business strategies. Firms are asked to compare earnings prospects, supply and demand, inventory, sales prices and accounts receivable with the same period one year earlier. The current month and the following two to three months are evaluated separately in each question. Replies are limited to "better," "same" or "worse" than a year earlier. The diffusion index is the difference between the ratio of positive ("better") and negative ("worse") responses.

About Japan External Trade Organization (JETRO)

JETRO, or the Japan External Trade Organization, is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Originally established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment into Japan and helping small to medium size Japanese firms maximize their global export potential.

Source: Japan External Trade Organization (JETRO)

Contact:
Japan External Trade Organization (JETRO)
Public Relations Division
E-mail: webinfo@jetro.go.jp
http://www.jetro.go.jp


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Date:Sep 27, 2006
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