Foreign Direct Investments Up 123% in August

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Net foreign direct investment (FDI) inflows increased by 123% to reach $143 million in August 2013, more than twice the $64 million posted in the same month last year.

The significant rise in foreign investments into the country reflects the positive outlook of investors on the Philippines’ economic prospects in spite of the challenging global economic conditions. Domestic economic prospects have been supported by sound macroeconomic fundamentals and a smoothly functioning financial system.

Net inflows in FDI were observed across the three components, namely: a) equity capital, b) reinvestment of earnings, and c) placements in debt instruments. In particular, non-residents’ placements in debt instruments issued by local affiliates reversed to net inflows of $47 million during the month from net outflows of $44 million a year ago. Equity capital also yielded net inflows of $42 million as gross placements of $91 million more than offset withdrawals of $49 million. Gross equity capital placements—sourced mostly from the United States, Singapore, the United Kingdom, Japan and Germany—were channeled mainly to financial and insurance; real estate; manufacturing; human, health and social work; and information and communication activities. Meanwhile, reinvestment of earnings amounted to $54 million, lower by 18.4% compared to $66 million registered in the same month last year.

On a cumulative basis, net FDI inflows for the first eight months of 2013 grew by 25.4% to $2.8 billion from $2.2 billion posted in the same period last year. By component, non-residents’ net placements in debt instruments rose to $1.7 billion during the period, more than fivefold the $318 million level recorded during the comparable period in the previous year. Parent companies abroad continued to lend to their local subsidiaries/affiliates to fund existing operations and/or expansion of their businesses in the country.

Non-residents’ gross placements of equity capital increased by 60.6% in January-August 2013 to $2.1 billion from $1.3 billion in the same period in 2012. The bulk of equity capital investments—which came mainly from Mexico, Japan, the United States, the British Virgin Islands, and Malaysia—were directed to manufacturing; water supply, sewerage, waste management and remediation; financial and insurance; real estate; and arts, entertainment and recreation activities. Meanwhile, reinvestment of earnings amounted to $492 million, lower by 32% than the $723 million recorded in the comparable period last year.

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