Asian crisis affects Aussie industries

Asian crisis affects Aussie industries

CANBERRA (Reuters): Australian industry expects the Southeast Asian economic crisis to have a direct effect on business, with 16 percent of companies surveyed by the nation's largest industry group expecting a significant impact.

The Metal Trades Industry Association (MTIA) found two thirds of the 200 manufacturing and construction companies surveyed had a direct exposure to the crisis.

"Of these, one half have already been affected while many others are under pressure from reduced export demand, deferral of projects and the prospect of substantially intensified import competition in the Australian market," MTIA chief executive Bob Herbert said on Wednesday.

The survey coincides with continued warnings from some leading local companies that their profits and overall business would be affected by the Asian downturn.

Coal miner QCT Resources said in late October that exports may be affected while property developer, funds management and insurer Lend Lease Corp said earnings growth from Asia would slow.

Australia is officially tipped to achieve 3.75 percent economic growth in 1997/98 but some private sector economists have estimated that Asia's economic woes could strip up to 1.75 percentage points off growth, especially if the malaise widens to North Asia which is the destination of a large proportion of Australia's exports.

About 15 percent of exports go to ASEAN member countries while up to 50 percent goes to all of Asia, with the difference explained by huge iron ore and coal sales to the key markets of Japan and South Korea.

According to the MTIA, a number of companies also saw opportunities in Asia arising from the crisis, but these would carry a heightened risk.

The MTIA said 97 percent of companies directly affected by the crisis expect a deterioration in their exports to Southeast and North Asia, with 21 percent expecting it to be significant.

As well, 80 percent of respondents plan to revise downwards their earnings from the Asian region, and seven percent of respondents, or 13 companies, plan to accelerate relocation activities due to the competitive advantage the currency depreciation has given Asian economies, the MTIA said.

A number of leading Australian companies have warned in recent months that their profits and overall business would be affected by the Asian downturn.