950828

Japan capital investment to show rebound

TOKYO: Capital investment by Japanese companies will rise for the first time in four years during the fiscal year to March 31, 1996, the Long-Term Credit Bank of Japan said in a report.

It predicted that for all industries, capital investment would increase 4.3 percent, with the manufacturing sector up 9.6 percent and the non-manufacturing sector up 2.2 percent.

But it forecast that overall investment would rise only 0.5 percent in the 1996/97 year as firms became more cautious.

The bank's report was based on a survey, conducted twice a year, of 1,758 companies.

When the latest survey was conducted, the dollar stood at 87 yen. But the strong yen appears not to have significantly deterred manufacturing investment because the sector's plans were revised up by 3.2 percentage points since the previous survey in February, LTCB said.

This was because the sector had already reduced investment as much as it could, and because investment to increase production efficiency focused on new business areas, it said.

But the non-manufacturing sector lowered its investment plans by 2.6 percent since the previous survey, largely because of a 24 percent cut in plans for real estate, it said.-Reuter