The survey of Japanese-affiliated manufacturers in Asia - covering Thailand, Malaysia, Singapore, Indonesia, the Philippines, Vietnam and India, with 830 respondents - was conducted last December and showed that an increase in workers' wages was the most frequently cited employment problem among respondents in all of the countries included.

"Many Japanese companies operating in Asia anticipate wages to continue on this upward trend," Jetro said in a statement.

Last November, Jetro conducted a comparative survey of investment-related costs in 30 major Asian cities and regions.

One interesting finding was that wages for workers in Japanese companies operating in Phnom Penh and Vientiane were lower than in neighbouring countries. The level in Phnom Penh is roughly 60 per cent of Bangkok's and 50-80 per cent of Ho Chi Minh City's. Vientiane's wage level in Japanese firms is roughly 40 per cent of Bangkok's and 30-80 per cent of Hanoi's.

"Japanese companies operating in labour-intensive sectors in Thailand and Vietnam are now also considering Phnom Penh and Vientiane as potential locations for new production bases," the survey noted.

Cambodia and Laos are attracting increased attention by Japanese investors because the Second Mekong International Bridge, which opened last December, is expected to enable easier conveyance of goods by land.

Total costs in Phnom Penh and Vientiane are not necessarily low. For example, rates for international calls, electricity, container transport (cost of transportation to the nearest port must be added in the case of Laos) and fuel are all relatively high. A reduction in business-operation costs in these cities is required, as are improvements to the economic infrastructure and public utilities.

Investment-related costs like wages, land prices, office rents, telecommunication expenses and public utility rates in each city were compiled into a list for easy comparison in US dollars.

Last November's survey also showed an upward trend in personnel costs, office rents and foreign-employee housing. Transportation costs trended downwards, reflecting the decline in crude oil prices in the second half of last year.

In Last year's third quarter, the legal minimum wage was raised in the Chinese cities of Beijing, Shanghai, Guangzhou, Dalian, Shenyang, Qingdao and Shenzhen. Nominal wages posted double-digit increases for consecutive years in northern and eastern China (Beijing, Shanghai, Dalian, Shenyang and Qingdao) last year while registering single-digit increases in southern China (Guangzhou and Shenzhen). Minimum wages were also raised in Bangkok, Jakarta, Batam, Manila, Cebu, Hanoi, Ho Chi Minh City, New Delhi and Karachi last year.

Comparing monthly wages for industrial workers in each city, wage levels in major cities can be categorised into four groups: US$100 (Bt3,500) or less (Rangoon, Phnom Penh, Vientiane, Colombo and Dhaka); $100 to $250 (Beijing, Dalian, Shenyang, Qingdao, Bangkok, Kuala Lumpur, Jakarta, Batam, Hanoi, Ho Chi Minh City, New Delhi and Karachi); $250 to $500 (Shanghai, Guangzhou, Shenzhen, Manila, Cebu and Bangalore); and more than $500 (Seoul, Hong Kong, Taipei and Singapore). Although China's low personnel costs have been cited as an advantage by investors, the survey showed that wage levels in eastern and southern China were higher than in Bangkok, Kuala Lumpur and Jakarta.

In Vietnam, the legal minimum wage was raised for the first time in seven years. Average wages rose in Ho Chi Minh City because of such factors as difficulty in recruiting mid-level managers and strikes calling for pay hikes. Indonesia (Jakarta and Batam) saw a dramatic increase in the legal minimum wage last year. The legal minimum wage was raised again this past January 1 in Thailand and Indonesia.