FDI Net Inflows Up 42% in 1H 2018

Foreign direct investments (FDI) posted net inflows of $831 million in June 2018, which was 9.2 percent higher than the $761 million in the same month last year, data from the Bangko Sentral ng Pilipinas (BSP) shows. This was largely on account of non-residents’ net equity capital investments of $184 million during the month, which was a turnaround from the $67 million net withdrawals in June 2017.

The improvement in net equity capital investments was due to the 83.6 percent expansion in gross placements of equity capital to $208 million, which more than offset withdrawals of $24 million. Equity capital placements came mostly from Singapore, Luxembourg, Japan, the United States and the Netherlands.

By economic activity, equity capital placements were invested mostly in manufacturing; electricity, gas, steam and air conditioning supply; real estate; financial and insurance; and wholesale and retail trade activities. Non-residents’ investments in debt instruments issued by their local affiliates, consisting of intercompany loans, amounted to $569 million, albeit 24.6 percent lower than the $756 million recorded in June last year. Reinvestment of earnings increased by 7.1 percent to $77 million during the month.

On a cumulative basis, FDI registered net inflows of $5.8 billion for the first semester of 2018, an increase of 42.4 percent from $4 billion last year. The continued inflows of FDI indicate investor confidence in the Philippine economy on the back of strong macroeconomic fundamentals and growth prospects.

Non-residents’ net investments of equity capital grew more than seven times to reach $1.6 billion. This emanated mainly from the 244.1 percent surge in equity capital placements to $1.7 billion, alongside the 46.9 percent decrease in withdrawals to $163 million. Equity capital infusions during the first semester were sourced primarily from Singapore, Hong Kong, China, Japan, and the United States. These were invested mainly in manufacturing; financial and insurance; real estate; arts, entertainment and recreation; and electricity, gas, steam and air-conditioning supply activities. Higher investments in debt instruments were recorded also in the first half of the year amounting to $3.8 billion from $3.4 billion. Reinvestment of earnings rose to $420 million during the period.

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