Investment may rise 3.2% in ’97, MITI says

Corporate investment during fiscal 1997 is expected to increase 3.2 percent from the previous year, reflecting the ongoing moderate economic recovery and improvement in corporate profits, according to a report released June 12 by the Ministry of International Trade and Industry.

The semiannual report was presented to a subcommittee of the Industrial Structural Council, an advisory body to the MITI chief. As a favorable indicator, a ministry official pointed out that investment in research and development rose a substantial 16.5 percent from the previous year, accounting for 12 percent of total investment by manufacturers.

The report, however, shows that concerns are growing over the prospect of an increased social securities burden on companies amid a rapidly aging society. Asked about the impact of the ongoing aging of society on investment activities, 43.7 percent of the respondents said their investment will decrease under the weight of an increased social securities burden, the report says.

Survey questionnaires were sent to 2,346 companies — 1,457 manufacturers and 889 non-manufacturers — that have capital of 100 million yen or more, of which 1,338 responded. As to government measures to prevent the hollowing out of industries, 73.1 percent of respondents recommended further deregulation, while 64.3 percent called for adopting an internationally competitive corporate tax system.