Foreign investments seen to rise

MANILA, Philippines – Bangko Sentral ng Pilipinas (BSP) officials are cautiously optimistic that foreign investments could actually be higher than expected this year, possibly pushing the country’s forex reserves higher and the balance of payments (BOP) stronger.

The BSP said yesterday that based on early indicators, the country’s gross international reserves (GIR) could reach $39 billion—the high end of the official projected range of $37 to $39 billion for 2009.

BSP Deputy Governor Diwa Guinigundo said there are indications that foreign direct and portfolio investments are holding steady and could even increase compared with last year’s levels.

Combined with these investment inflows, Guinigundo told reporters that the balance of payments could be higher than the $700-million level projected for 2009.

“If this trend in remittances continues and considering the increase in the government’ additional foreign borrowing, there is scope for the BOP to be higher,” Guinigundo said.

The BSP still has not made its foreign direct investment projections public but Guinigundo said FDIs are actually “holding positive” and so are portfolio investment inflows.

“The numbers for the first four months of 2009 are still higher than 2008,” he said.

According to Guinigundo, investors are always talking about safe havens for their money but with the world markets in shambles, there are very few destinations.

Guinigundo said investors are starting to differentiate between markets and the Philippines compared favorably among its peers in the emerging markets.

“I think they are beginning to differentiate and I hope that can be felt in the stock market very soon,” Guinigundo said.

Compared with 2008, Guinigundo said there is a “scope that FDI could be higher.”

“How much higher, it’s difficult to say right now,” he added.

Although FDIs remained positive, indicating that foreign capital is still flowing into the country and not pulling out, the latest available data indicated a 52-percent decline in January with only $13 million coming in compared to $27 million in 2008 and $184 million in January 2007.

Looking closer, however, January figures indicated that equity placements declined by 48.7 percent from $115 million last year to $59 million this year. But equity withdrawals also declined by 84.8 percent from $33 million to $5 million.

Foreign direct investments fell nearly 48 percent in 2008, just barely managing to sustain a net inflow of $1.52 billion compared with $2.916 billion at the end of 2007.

Guinigundo said portfolio inflows are higher in the first four months of the year although the latest publicly available data indicated that in the first two months, the cumulative total was 79 percent lower at $22.6 million from the $105.9-million net inflow in the comparable period in 2008.–Des Ferriols, Philippine Star