A survey conducted by Japan External Trade Organization (Jetro) showed that the overall current business sentiment for the five ASEAN countries included in the survey was down 4.7 points in December.

Indices for Malaysia, the Philippines and Indonesia remained in negative territory for the twelfth, eighth, and second straight months respectively in the December survey.

Short-term business sentiment was also down in all surveyed locations in the ASEAN in December, with the region’s overall index dropping 6.5 points and indices for each country slipping into negative territory.

Depressed sentiment in the region reflects the growing concern among Japanese firms over a stagnant consumer spending and increased costs burdens due to tighter monetary policy of governments in the region.

This policy continued in the latter half of 2005 to contain inflation and stabilize currencies after continued oil price hikes.

The overall current Japanese business sentiment for China and North Asia improved 3.5 points over the previous month in the December survey.

Current Japanese sentiment was up in all surveyed locations, with the exception of North China, where the index dropped 3.6 points.

The index for South Korea remained strong in December at over 40, on the back of a buoyant domestic economy.

South Korea continues to be the region’s lone bright spot, as Japanese firms operating in the country posted strong business confidence for the fourth month in a row.

Business confidence among firms in China, however, hovered at a lower level in December, due to concerns over increasing competition from foreign and local companies in the region as well as oversupply in the domestic market.

Overall short-term business sentiment for China and North Asia fell 1.5 points in December.

Short-term business sentiment improved in North and Northeast China, while remaining unchanged in East China and declining in all other locations in December; indices for South China and Taiwan fell into negative territory in this month’s survey.

As a supplement to the regular monthly survey, JETRO included questions in the December survey regarding the impact of the avian flu outbreak on business.

A vast majority of respondents (95.4 percent) reported "no impact" on current business.

Asked about two to three months from now, however, 23.4 percent of respondents in China and North Asia and 12.4 percent in ASEAN expect some impact in the future.

Among those worried about future impacts, most believe that new outbreaks or spread of the flu would discourage the movement of people, including business trips, to affected regions.