Philippine businesses affiliated with Japanese companies have turned more pessimistic about their profit prospects this year, according to a yearly survey by the Japan External Trade Organization (Jetro).

In the study that covered the Philippines, Indonesia, Thailand, Malaysia, Singapore, Vietnam and India, Jetro defined a Japanese-affiliated company as one in which a Japanese parent firm has an equity of at least 10 percent.

The Jetro poll showed that in the Philippine manufacturing sector, expectations of operating profits dropped to 12.2 diffusion index (DI) points from 29.9 points in the 2007 survey.

The DI, a measure of business sentiment, refers to the difference between answers that indicate profitability will be better year-on-year and those that say the worse is expected.

A bigger difference means that there are more positive answers, indicating a more optimistic outlook.

In the non-manufacturing sector, the DI slumped to zero this year compared to 25.4 points in the 2007 survey.

In both cases, the figures mean that more companies are now pessimistic about their operating profits.

There are an estimated 610 Japanese affiliate firms in the Philippines, the fewest among the six Southeast Asian countries covered in the 2008 survey.

Jetro sent out questionnaires to 333 local firms, 172 of which returned valid answers.

Respondents in the manufacturing sector include those engaged in the electronics and electronic parts and components; motor vehicle and motorcycle parts and accessories; plastic products and fabricated metal products; motor vehicles and motorcycles including parts; and electric machinery, electronic equipment and parts.

These firms attribute their worsened prospects to increased procurements costs, increased fuel and utility (electricity and gas) costs, and insufficient passing on of costs.

Non-manufacturing respondents include firms engaged in construction and plants; transport and warehousing and trading.

These firms blamed sales declines in the local market, increased personnel costs and increased fuel and utility costs.

As for the profit outlook for 2009, the DI for the manufacturing respondents dropped to zero compared with 12.2 points last year.

Among non-manufacturers, those who expect operating profits to decrease outnumbered those who see increased profits at a DI of 3.5 points.