"We caution investors on the risks inherent in the state of Y2K readiness in Indonesia, India, China and Thailand," said Sean Debow, head of regional valuation and accounting research.

In an interview with Reuters, Debow said he was most concerned about the poor state of readiness of power producers and transportation systems in less-developed markets and the potential fallout on the rest of the region.

Debow, whose assessments were based on an eight-week survey of some 230 companies in almost all Asian countries, said decision makers in some companies showed only superficial knowledge of Y2K risks connected to the turn of the century.

The Y2K bug stems from a programming practice of using only two digits to denote the year. Older computers could mistake 2,000 for 1,900 and crash at thestart of the new year.

Many respondents in the survey seemed to think they had solved the problem merely by installing new Y2K compliant computers and software, Debow said.

Except for Hong Kong and Singapore, and top-tier firms in South Korea and Taiwan, many companies elsewhere seemed unaware that "embedded chips" in their systems and manufacturing processes could derail operations in the new millennium, he said.

"Our general feeling in Asia is that we are more concerned about embedded chips than we are about anything else. There's not enough focus on that," he said.

Non-compliant embedded chips, if left unrectified, may cause major problems in basic infrastructure such as power and water supplies and transportation, which would then have a domino impact on other vital services and manufacturing processes.