FDI inflows up 6.8% to $1.3 billion in 9 months

MANILA, Philippines – Foreign direct investments (FDI) climbed by 6.8 percent in the first nine months of the year amid higher equity infusions and robust reinvested earnings, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando M. Tetangco Jr. said FDI inflows reached $1.269 billion from January to September this year or $81 million higher than the $1.188-billion inflows registered in the same period last year.

“The cumulative level for the nine-month period was higher by 6.8 percent than the level recorded in the comparable period in 2008 on the back of stronger equity capital inflows and higher reinvested earnings,” Tetangco stressed.

He pointed out that the net FDI inflow from January to September was primarily due to net equity capital infusion that surged by 26.3 percent to $1.319 billion compared with $1.044 billion in the same period last year.

Data showed that 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.

Equity investments, the BSP reported, came primarily from the US, Japan, Hong Kong, and the Netherlands.

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

Tetangco said 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.

Data also showed that other capital account 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 outflows were primarily attributed to the intercompany loan repayments to foreign direct investors and higher trade credits extended to parent companies abroad,” the BSP chief explained.

Tetangco said 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.

He traced the FDI outflow in September to the relatively more subdued investor appetite amid the still-weak global economic recovery.

“This was reflected in modest placements of equity capital, which were more than offset by withdrawals from non-resident investors,” Tetangco added.

Equity capital withdrawals jumped by 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. –Lawrence Agcaoli (The Philippine Star)