Net foreign direct investments surge to $601 million in April

MANILA, Philippines – Net foreign direct investments surged to $601 million in April, propelled by the infusion made by Japan’s Kirin Holdings into San Miguel Brewery.

Data from the Bangko Sentral ng Pilipinas (BSP) revealed that the April net inflows of foreign direct investment (FDI) was nearly three times the level recorded in the same month last year.

The April net inflows brought the four-month total to $648 million, putting it squarely back into the positive zone from the $502-million inflow over the same period in 2008.

The BSP reported that foreign equity capital placements reached $619 million during the month, with the bulk of the equity capital infusion stemming from Kirin’s acquisition of SMB shares.

Kirin increased its stake in San Miguel Brewery to 48.3 percent after buying 778.85 million shares at P8.84 via a tender offer in a deal worth around P6.9 billion ($141.8 million).

Kirin earlier paid conglomerate San Miguel Corp. P58.9 billion for an initial 43.3 percent stake in San Miguel Brewery in February at the same share price.

The BSP said total net inflows of equity capital and reinvested earnings also bounced back, offsetting net outflows in the other capital account.

Net equity capital amounted to $581 million in April alone and to $627 million in January to April 2009, representing a 10-fold increase in April and a 121.6-percent increase over the four-month period.

The BSP said these inflows went into the manufacturing, real estate, construction, financial intermediation, and trade/commerce sectors, with investors coming mainly from Japan and the US.

Reinvested earnings, on the other hand, amounted to $67 million, a marked improvement from the $233 million net outflow posted in the comparable period a year ago.

BSP Governor Amando M. Tetangco Jr. said positive news on corporate earnings results for the first quarter encouraged investors to retain earnings and profits in local banks and enterprises.    

Meanwhile, the other capital account – consisting largely of intercompany borrowing/lending between foreign direct investors and their subsidiaries or affiliates in the Philippines-reverted to a net outflow of $46 million as a result of intercompany loan repayments and trade credits extended to affiliates abroad.

According to the BSP, foreign direct investments would fall to $700 million this year as investors hold back their plans to invest in the Philippines in the midst of the global economic recession.

Last year, foreign direct investments amounted to $1.4 billion, indicating that this year’s level would be half of the foreign direct investments that trickled in, going mostly to power and telecommunications.

The BSP expects foreign direct investments to weaken significantly but inflows would remain positive for the whole year.

The BSP said fears of a dramatic economic decline had the same effect in the financial market but this year, monetary officials were expecting portfolio investments to recover from last year’s $3.7-billion outflow to a $600-million inflow for the whole year. –Philippine Star