Japanese firms in PH among most optimistic

Japanese companies in the Philippines are among the most optimistic about their growth prospects, according to the latest survey by the Japan External Trade Organization (Jetro).

Survey results showed that 77.5 percent of Japanese firms polled in the Philippines expect to have posted increased operating profits in 2016.

Only Japanese firms in Korea were more optimistic, with 81 percent expecting surplus operating profits.

Japanese companies in the Philippines were also found to be steadily increasing their procurement from local firms to help reduce material costs in their operations.

These costs accounted for approximately 60 percent of production expenses.

The survey was conducted by Jetro from Oct. 11 to Nov. 11, 2016 and covered the business conditions of Japanese companies in 20 countries and regions in Asia and Oceania.

It received valid replies from 4,642 companies, representing a 42.3-percent response rate.

In general, results showed a recovery of business confidence among Japanese companies operating in Asia and Oceania in 2016, and expectation for further expansion in 2017.

“Increased operating profits for 2016 (were) expected by 42.9 percent (of the companies polled, while) business confidence in emerging countries was (seen) improving. Regarding operating profit forecast for 2017 as well as that for 2016, over 40 percent of companies expect an increase. Companies predicting a downturn for 2017 came to 11.1 percent, a decrease of 13 points from the outlook for 2016 (24.1 percent),” Jetro reported.

“The diffusion index (DI) in 2017—the proportion of businesses reporting increased operating profits minus those reporting decreased operating profits compared to the previous year—marked 36 points, a 17.3-point increase compared with 2016. Among reasons for improvement, ‘sales increase in local markets’ ranked first, followed by ‘improvement of production efficiency’ and ‘sales increase due to export expansion.’ Looking at the results by country and region, all countries except Laos saw an improvement of business confidence,” it added.

However, some Japanese companies operating in countries that are not part of the TransPacific Partnership agreement are anticipating a negative impact once this deal enters into force.