BSP sees FDIs growing 20% next year

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) expects foreign direct investment (FDI) inflows to jump 20 percent next year on the back of a gradual recovery by the global economy.

In a forum organized by the Foreign Correspondents Association of the Philippines (Focap) yesterday, BSP Governor Amando Tetangco Jr. said FDI inflows would hit $1.8 billion next year, $300 million higher than this year’s $1.5 billion.

“As global economy recovers, obviously there would be move towards expansion, but I don’t think it would be rapid. There would be expansion but it would be moderate,” he explained.

Tetangco said expansion projects would entail higher FDI inflows into emerging markets including the Philippines.

“We will benefit from this expansion, because the performance we have shown the last few years in terms of sound macroeconomic fundaments and sound stable financial system as well the sustained growth even despite this crisis period,” Tetangco added.

Latest data from the central bank showed that FDI inflows climbed by 6.8 percent to $1.269 billion in the first nine months of the year from $1.188 billion in the same period last year amid higher equity infusions and robust reinvested earnings.

Net equity capital infusion surged by 26.3 percent to $1.319 billion compared with $1.044 billion in the same period last year. This after equity placements went up by 20.6 percent to $1.457 billion from $1.208 billion while equity withdrawals retreated by 15.9 percent to $138 million from $164 million.

The BSP reported that equity investments came primarily from the US, Japan, Hong Kong, and the Netherlands.

Bulk of the equity capital was placed in manufacturing, real estate, construction, services, financial intermediation, mining, trade and commerce as well as telecommunications.

On the other hand, reinvested earnings amounted to $114 million from January to September this year, a complete reversal of the $75 million net outflow registered in the same period last year.

Other capital accounts, including intercompany borrowing or lending between foreign direct investors and their subsidiaries or affiliates in the Philippines, reversed to a net outflow of $164 million from a net inflow of $219 million in the same period last year.

The country registered a net outflow of $6 million for the month of September alone, a complete reversal of the $211-million net inflow booked in the same month last year.

Equity capital withdrawals jumped 181.1 percent to $31 million in September from $11 million in the same month last year while equity placements plunged by 68.5 percent to $17 million from $54 million.

The central bank has decided to double the projected FDI inflows this year to $1.5 billion instead of $740 million this year due to strong equity inflows and higher reinvested earnings.

The central bank sees gross international reserves (GIR) hitting a record high of $43 billion to $44 billion and its balance of payments (BOP) position posting a surplus of between $4 billion and $5 billion this year. –Lawrence Agcaoili (The Philippine Star)